Germany: Funds raise over EUR 100 billion
- 31 per cent of inflows into funds launched in Europe originate from Germany
- Spezialfonds: outsourcing of portfolio management on the rise
From the beginning of January to the end of November 2018, investment funds in Germany collected EUR 100.7 billion net in new money. Fund sales are therefore at the level of the preceding years, with the exception of the two record years of 2015 (EUR 193 billion in inflows) and 2017 (EUR 160 billion in inflows). Apparently, new business in the current year 2018 is significantly lower in other European countries. Funds launched in Europe raised EUR 275 billion net by the end of October 2018, with the German sales market contributing approximately 31 per cent of this volume. During 2017, Germany’s share stood at 17 per cent (or EUR 163 billion of EUR 949 billion over the period from the beginning of January to the end of December). Open-ended Spezialfonds remain the stable linchpin of inflows in Germany. Institutional investors, such as retirement benefit schemes and insurance companies, invested new money to the tune of EUR 76.3 billion net in these funds by the end of November 2018. Open-ended retail funds attracted EUR 22.9 billion in fresh capital, with bal-anced funds alone raising EUR 21.6 billion. Property funds collected EUR 5.7 billion. Other segments, such as bond funds, registered outflows. November saw retail funds’ new business characterised by inflows into money market funds for institutional investors. Closed-ended funds brought in EUR 1.6 billion during the current year 2018. Institutional investors withdrew EUR 27.6 billion from discretionary mandates. As at the end of November 2018, the German fund industry represented assets totalling EUR 3 trillion.
Portfolio management by specialised asset managers on the rise
Over recent years, the outsourcing of portfolio management has increased. For open-ended securities Spezialfonds, which hold assets to the tune of EUR 1.5 trillion, 41 per cent of these assets are managed by non-affiliated asset managers. At the end of 2012, this share stood at 37 per cent. This is also due to the fact that many institutional investors opt for specialised asset managers, for example in the US, to manage certain asset classes, such as emerging-market securities or corporate bonds. Moreover, foreign asset managers use the portfolio management of funds to access the German market without having to establish their own investment management company. For open-ended property Spezialfonds holding net assets totalling EUR 89 billion, this trend has clearly gained traction. Six years ago, managers outside the group only looked after 4 per cent of these assets. Since then, their share has increased to 25 per cent.