Inflows to German funds in 1Q outstrip 10-year average

Inflows to German property funds in the first quarter of 2018 outstripped the 10-year average by €7bn to total €38bn, according to the German Investment Funds Association, the BVI this month.

Open-ended Spezialfonds saw inflows of €25.4bn in the first quarter, compared to €12.4b for open-ended retail funds. Closed-end funds, for their part, attracted inflows of €400m. Institutional investors withdrew €6.9b from discretionary mandates.

‘The main drivers behind new business in general are retirement planning and low interest rates,’ Frank Bock, spokesperson of the German Investment Funds Association BVI, told REFIRE.

Falling share prices had an impact on equity funds in March,with investors withdrawing €1.3bn net from equity ETFs, with €1.1bn flowing out of actively managed equity funds, according to the BVI. Balanced funds, which invest in both equities and bonds, collected €1.9bn. This is more than three-fold the €600m that they raised in February. Money market funds and property funds also recorded inflows of €500m each. On balance, open-ended retail funds recorded outflows of €1.2bn.

Spezialfonds: external managers controlling almost a quarter of assets

Open-ended property Spezialfonds managed net assets totalling €80bn as of end-March. For 76% of assets, the management company or another portfolio manager within the affiliated group is responsible for making the investment decisions. For the remaining 24% of assets, these decisions are taken by non-affiliated asset managers. Since the end of 2012, their 4% share has grown six-fold.

In recent years, the outsourcing of portfolio management has also increased for open-ended securities Spezialfonds. Of the €1.5 trillion of AUM, 41% are managed by non-affiliated asset managers, up from 37% at the end of 2012. This is primarily due to the fact that foreign asset managers use portfolio management of funds to access the German market without having to establish their own investment management company, according to the BVI. In addition, many institutional investors opt for specialized asset managers to manage certain asset classes, including corporate bonds or emerging-market securities. (ssk)