Union Investment reports record AUM but lower net inflows for H1
Union Investment has reported assets under management hit €349.1bn as of 30 June, up 4.90% on the same period a year ago, representing a new high, although the first half net inflows of €9bn were down slightly on the €11.3bn recorded for the first half of 2018.
This was still a higher net inflow than the average recorded over the past decade of some €8.2bn, the manager added.
It added that asset growth has outpaced the broader German AM industry, according to CEO Hans Joachim Reinke: "We are growing at a faster rate than the market as a whole. Whereas the German fund industry has expanded by just over 50% in this turbulent decade, we have more than doubled our assets under management."
Another trend noted in the retail flows in particular relates to the ongoing low interest environment, Reinke continued.
"For a number of years now, our products have been addressing the fundamental problems faced by retail customers, namely how to build up capital, structure it and ultimately also secure their investment."
"The way in which people save is evolving at a rapid rate. Increasing numbers of investors are starting to realise that low interest rates are here to stay and so are switching from interest-bearing products to investments with an intrinsic value. This insight is in itself nothing new, but we are now clearly seeing that people are acting rather than just thinking about it."
Union Investment has seen the number of savings fund agreements rise by some 400,000 over the 12 months to the end of June, to hit 2.5 million.
"The trend towards investments with an intrinsic value is also evident here. Equity, mixed and real estate funds are favoured by 95% of investors, and that figure rises to 99% for new investors."
The averge saved per month into these plans is €157, but for those plans set up in the past year, the level is higher at €224.
And although much debated in the German pension contenxt, the Reister pension business continued to grow, with another €644m saved this way in the first half, compared to €640m saved in the first half of 2018. The total number of fund linked savings plans managed by Union Investment is around five million.
On the institutional side, the group reported net inflows of €4.9bn, which is down from €6.6bn reported for the first half of last year. But total institutional client assets still gained by some 3.8% to €199bn by the end of June.
"Spread products offering an acceptable level of risk were particularly popular in the first half of 2019 due to the prevailing backdrop of low interest rates," Union Investment stated.
"Funds with a focus on corporate bonds saw especially strong demand, for example. Equity funds also attracted healthy interest. Real estate fund solutions remained high on the wish list of many institutional investors, but limited availability of properties with a suitable risk/return profile put the brakes on investment activity. Infrastructure investments were also much sought after. Indeed, a new infrastructure fund secured capital commitments in excess of €440 million."
Sustainability
A key growth area is in sustainability, with institutions putting more money into sustainable solutions, the manager reports.
Reinke said: "Sustainability is now an essential factor in the investment strategy of institutional investors. We are the leading provider of sustainable investment funds in Germany and have been operating this business since the early 1990s in partnership with several church banks, and not just since it became fashionable. Overall, we can look back on an initial six months of steady growth in institutional business. There is brisk demand for our solutions from customers inside and outside the cooperative sector, both in Germany and abroad."
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