Fund placement agent max.xs spells out what German fund buyers want
German investors, perennially cautious in their strategy selection, are also making life particularly difficult for the sales teams at newer boutique managers in general.
German investors, perennially cautious in their strategy selection, are also making life particularly difficult for the sales teams at newer boutique managers in general.
Oliver Roll (pictured), managing director of max.xs, a German fund marketing company, says boutique offerings are less attractive to fund selectors simply by virtue of being new and niche.
Germany’s regulator is also, perhaps unwittingly, making it harder for new funds to raise money. As it tightens its grip on allocating institutions, Roll says the documentation, control and risk management involved in allocating to a new fund is putting investors off some innovative products.
He says: “The market has adopted a ‘winner takes it all’ structure. A clear trend this year [is] existing investments do get bigger, but managers are not seeing any allocations to new products.”
The preference of German allocators for funds from larger houses mirrors a trend evident across Europe, picked up by Lipper back in April.
The most popular funds in Europe that month came from the likes of UBS, which topped the index fund list with €3bn inflows, and other large players such as Allianz, PIMCO, AXA and AllianceBernstein.
Other investment trends among German allocators that Roll describes include an appetite for credit, corporate bonds, high yield and, to a lesser extent, convertible bonds.
Allocators are adopting a global, not regional, focus. Trying to diversify their risk exposure as much as they can, they prefer to look beyond Europe, believing that ‘where the growth is, the return is’.
When it comes to new funds, those selectors in Germany are seeking income-generating strategies, to secure the little bit of return available. As a consequence, those managers that are not losing money on their investments within existing structures are the ones attracting new capital.
Among retail clients, Roll says, “there is a clear trend to disinvest from funds altogether.” Cautious Germans prefer to spend their savings on tangible goods, instead of investing in funds or financial products with no guarantee of future returns.
Overall, Roll says: “There isn’t much new business. Most of the money is coming from savings plans, which are investing their premiums.”
This continues a trend identified by Lipper last year, when Germans sold off all fund types.
Equity funds are a red flag for many allocators, as most investors perceive them as being too risky in the current volatile climate.
Statistics from German fund trade body Bundesverband Investment und Asset Management show investors continue to favour bonds over equity, allocating a total of €11.2bn to fixed income products this year to 30 June.
