Danish investors look globally for new funds

The overwhelming majority of the 41 new funds launched into the Danish investment funds market through 2015 were focused on foreign equity and bond assets, according to figures published by the Danish Investment Fund Association (IFB).

Of these new funds, 18 were equity funds investing abroad, and 15 were bond funds investing abroad. Nine funds were closed.

The data also shows that among Danish retail investors the trend towards owning foreign assets continued through the past year, as 2015 ended with some DKK272bn (€36.5bn) invested in foreign equity, for a market share of 36%, and some DKK200bn (€27bn) invested in foreign bonds, for a market share of 27%.

The value of foreign assets was boosted by the dollar exchange rate, which gained 11.6% against DKK through the year.

Proportionately, Danish retail investors held 21% of assets in Danish bonds and 5% in Danish equity. However, these were among the asset classes that gained most through the year because of market movement, the IFB figures further suggest.

The total value of assets in Danish investment funds held by retail investors gained some 8.6% over the year to stand at DKK751bn (€101bn). Funds focused on Danish equity saw gains of 34%, mainly because of market movements. Balanced funds saw their value overall increase 24%, following net investments of some DKK9.5bn.

In terms of institutional funds represented by IFB, the total value of assets rose 7.6% to some DKK1,060bn (€142bn), following net inflows of some DKK8.2bn). This means that the total assets represented by IFB members targeting institutional investors has grown by some DKK527bn (€71bn) since 2011. Some DKK300bn of this is due to new members joining the organsiation, IFB said.

Tax block

Also highlighted in the annual roundup is the IFB’s continued concern over Danish tax law making it more difficult to sell Danish funds to international investors.

Net flows from foreign investors to Danish funds was around DKK3.8bn (€0.5bn), as total assets of holdings of foreign investors rose 10.2% to DKK42.1bn. These net flows were consistent throughout the year, IFB said, apart from in November and December.

However, it estimates a far greater export potential for Danish funds, were it not for the prevailing tax regime, which it said “over-taxes” foreign investors in income funds compared to direct investments in the underlying securities.

“Therefore, foreign investors of course do not want to buy these funds. The tax rules also stop Danish providers of investment funds from aggregating the administration of their European investment funds in Denmark, which is costing Danish jobs and Danish economic growth,” IFB said.

 

 

 

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