German Fund Industry Expands by 9% Year-on-Year, BVI Data Reveals

The latest data from the German funds association, BVI, unveils a robust growth trajectory for the German fund industry, with assets under management surging to €4,289 billion as of March 31, 2024. This marks a significant 9% increase compared to the previous year, inching the industry close to its all-time high of €4,311 billion recorded at the close of 2021.

Equity funds emerge as the frontrunners within the open-ended retail funds segment, commanding €680 billion in assets. This dominance reflects a notable shift over the past five years, with equity funds' share rising from 36% to 47%, largely propelled by soaring stock prices. Balanced funds and bond funds follow suit, boasting assets worth €350 billion and €217 billion, respectively, albeit witnessing a decrease in their market share.

"Bond funds have topped the sales list, with new business totaling €5.4 billion in the first quarter of 2024, primarily driven by funds focusing on short-term bonds," shared data providers. Equity funds also demonstrated strong performance, attracting €2.5 billion in investments, while capital-protected funds saw notable inflows of €1.2 billion. In contrast, balanced funds continued to grapple with outflows, with €4.5 billion withdrawn during the same period.

Meanwhile, open-ended Spezialfonds, tailored for institutional investors like retirement benefit schemes and insurance companies, experienced a noteworthy net inflow of €9.5 billion in the first quarter of 2024. Notably, the outsourcing of portfolio management for Spezialfonds is on the rise, with 45% of securities fund assets now managed by external asset managers. This trend extends to property Spezialfonds as well, where external managers oversee 35% of assets, up from 26% in 2018.

The overall net inflow into the German fund industry for the first quarter of 2024 amounted to €21.7 billion. Open-ended retail funds attracted €3.8 billion, while Exchange-Traded Funds (ETFs) made a significant contribution of €5.4 billion, primarily from equity ETFs.

Furthermore, BVI has called upon the German government to take action regarding pensions, emphasizing the need for strategic measures in response to evolving market dynamics and demographic shifts. With bond funds leading the sales front and equity funds witnessing substantial inflows, the industry seems poised for continued growth, albeit against the backdrop of evolving investor preferences and regulatory considerations.

By fLEXI tEAM