German fund buyers are expecting to increase their exposure to foreign equities, as they seek diversification away from their own region's troubled markets.
German fund buyers are expecting to increase their exposure to foreign equities, as they seek diversification away from their own region’s troubled markets.
When searching for managers, they will favour specialists over generalists, conservative over aggressive managers and established operators over ‘up-and-coming’.
These were the key findings of research conducted over summer 2011 by Incisive Strategy, the research arm of Incisive Media that publishes Investment Europe.
Among the 65 respondents to the study, there were also more buyers than sellers of property funds.
But in a fairly clear reflection of what Germans seek in investments, there were also more buyers than sellers of money market funds.
The survey covered family offices, life companies, consultants, funds of funds, public and private banks, and wealth managers, among others. Two thirds of respondents manage at least €1bn.
The strongest evident buying trend was for foreign equities, where almost half (49%) said they planned to increase exposure, and only 13% will cut.
Speaking separately to the research, Ben Olmstead, vice president new product innovation at monitors eVestment Alliance, said a similar trend was evident across Europe.
“European equities were in outflow for 17 of the last 19 quarters. Investors in most geographies are looking outside their own geography.”
Thorsten Wallner, head of fund selection to Munich allocator Merck Finck, said: “We like the US and emerging markets instead of Europe [but] investors have some concerns beyond Europe as they do not know the US market as well as the German or Europe ones.”
In Incisive Strategy’s research 49% of respondents said they were planning to increase cash and deposit holdings, while only 8% plan decreasing this asset class.
Matthias Hoppe, vice president and portfolio manager with Franklin Templeton’s Multi-Asset Strategies team, told Investment Europe in December cash in the products his team oversees was at relatively high levels, but he is examining funds carefully for levels of ABS securities and other cash-equivalents.
Bunds and Treasuries, another safe harbour, are at 15%, “but are not held for the yield – they offer some level of security, but are not sustainable positions over the long term. Our clients today are focused on risk and volatility of a particular strategy.”
Some 37% of respondents to Incisive Research’s study said they planned increasing property, while only 14% plan to reduce exposure.