German investors were praised for acting “very prudently” last year by remaining invested in markets despite Russia’s invasion of Ukraine and other events that caused uncertainty.
The German fund industry saw €66 billion of inflows, according to analysis by the country’s fund association, BVI. This was despite the invasion, rising inflation and the energy-price shock
Open-ended spezialfonds (German fund structures for institutional investors) saw €62 billion of inflows in 2022, the majority of which came from retirement benefit schemes.
But private savers had also driven €40 billion into retail funds by the end of September despite market uncertainties. According to the German Bundesbank, private savers have been the biggest contributors to German retail funds since 2020.
Russia’s invasion of Ukraine was a “turning point” that led to significant declines in equity and bond markets, said Dirk Degenhardt, BVI president. But he added: “Nevertheless, investors have reacted very cautiously and prudently, because we have not seen high outlows, but rather a reluctance to buy.”
The BVI showed that fund companies managed total assets of €3,804 billion at the end of 2022 – almost 12% less than at the beginning of the year due to market conditions. However, the downward trend stopped at the end of September with a rebound in euqity markets.
Open-ended retail funds managed assets worth €1,280 billion, whereas the net assets of closed-end funds amounted to €52 billion.
The BVI said business stagnated for balanced funds and property funds over the year. Bond funds recorded outflows of €17.4 billion, led by bond funds focused on European currencies and corporate bond funds.
Equity funds reflected a shift in focus from regional to global. Global equity funds recorded €20 billion of inflows, but investors withdrew €11 billion from funds invested across Europe. Overall, equity funds recorded inflows of €0.5 billion. The equity category also saw outflows of €4.4 billion from equity ETFs.
Investers preferred funds meeting transparent sustainability requirements over conventional funds, showed the BVI data. Article 8 or Article 9 products under the EU’s Sustainable Finance Disclosure Regulation managed net assets worth €604 billion – 20% more than in the previous year.
According to the European Central Bank, Germany is the largest fund market in the EU, with a market share of 28%. Within the last five years, assets in Germany grew significantly more than in other markets such as Italy and France.
© 2023 funds europe
