German asset management industry reaches record

Ridhima Sharma
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German asset management industry reaches record

The majority of the assets are held by open-ended Spezialfonds (€1,875bn), ahead of open-ended retail funds at €1,116bn. Over the past ten years, the asset management industry's total asset volume has almost doubled (€1,706bn at the end of 2009).

"Last year, the solid sentiment in the financial markets had a positive effect on the fund industry. In light of rising share prices and inflows, the assets managed by fund companies reached a new record high of €3,398bn. This is an increase of 15 per cent on the previous year", said Tobias C. Pross, president of the German Investment Funds Association BVI, at the Association's annual media conference.

Second-best year for Spezialfonds sales

2019 saw open-ended investment funds raise new money to the tune of €120.2bn net from investors. Open-ended Spezialfonds are the driving force here with €102.7bn. This is their best sales year since 2015, when they recorded inflows of €121bn. Open-ended retail funds attracted €17.5bn in fresh capital.

Closed-ended funds posted inflows in the amount of €4.3bn. Investors withdrew €5.5bn net from discretionary mandates. With total inflows of €119bn, the asset management industry achieved higher inflows than in the previous year, when it recorded €91bn in new money.

Strong demand for sustainable retail funds

At €10.7bn, property funds topped the sales chart within the open-ended retail fund segment. In the previous year, property funds recorded €6.4bn in fresh capital. With inflows of €10.5bn, balanced funds rank second.

Equity funds registered inflows of new money to the tune of €4.4bn. Bond funds posted outflows of €3.7bn. This was primarily due to funds with short-term Euro-denominated bonds, which predominantly target institutional investors. These funds recorded outflows of €13.9bn. In the new business of open-ended retail funds, €7bn is attributable to sustainable funds. This is 40 per cent of the entire net inflows of open-ended retail funds.

Equity funds manage record holdings

The new business of open-ended retail funds equates to roughly one per cent of their total assets. With a record high of €423bn, equity funds remain the largest group in terms of volume. Driven by rising share prices and inflows, their market share has grown from 30 per cent at the end of 2009 to 38 per cent over the past ten years. At €311bn, or 28 per cent, balanced funds are the secondlargest group, followed by bond funds with €209bn (19 per cent) and property funds with €109bn (10 per cent).

Retirement provision is an important driver for Spezialfonds

Over the past ten years, i.e. since the end of 2009, the assets of open-ended Spezialfonds have more than doubled, from €729bn to €1,875bn, with retirement provision acting as a major driver. As at the end of 2019, insurance companies and retirement benefit schemes held investments in Spezialfonds totalling €1,159bn. This corresponds to a share of 62 per cent of Spezialfonds assets. Ten years ago, this share stood at 54 per cent. Retirement benefit schemes, such as pension schemes and pension funds in particular, gained in importance, with their share rising from 19 per cent at the end of 2009 to 29 per cent. Insurance companies continue to be the largest investor group in terms of volume. Their share has declined slightly, from 36 per cent to 33 per cent.