AllianzGI adds German equity fund to Sicav range

Allianz Global Investors has added a German equity fund to its Sicav fund range.

The firm was attracted to the German equity market by the strong performance of the country’s DAX index, coupled with the relatively cheap market valuations.

In this, Allianz is not alone – many global and local managers are bullish on the German equity market, which has performed far better than the aggregate European indices so far this year.

Year to date, Germany’s DAX is up 25% – more than twice the performance of MSCI Europe, up 11% since the start of the year.

At the same time, according to value-oriented fund manager Acatis Investment, “the DAX is still too cheap.” Acatis consider a level of 8,000 as appropriate for the index, which opened at 7,372 this morning.

“Most German investors have not yet returned to the market with new courage. We expect share prices to rise once the degree of equity investments begins to normalise,” Acatis commented.

Even as equities across Europe have benefitted from improving sentiments, the DAX is ahead of its peers. Over the month of October, the DAX 30 is up 5.8% against 3.4% for the MSCI Europe (ex UK) index over the same period.

Rob Smith, investment manager of the Baring German Growth Trust at Baring Asset Management, said: “We continue to see a compelling earnings environment [in Germany], yet this is not necessarily being translated into higher equity valuations. We believe this presents an attractive opportunity for investors, especially given the valuation of the German market relative to European peers.

We also believe another positive driver for equities is dividend yield in Germany, which remains supportive at around 3.5% after inflation (according to Thomson Reuters Datastream).”

The new Allianz GI fund seeks to benefit from this attractive situation by using a bottom up approach to invest in German companies. The fund has a slight bias towards growth stocks and will focus on large cap stocks, although it also intends to exploit opportunities in the mid and small cap segments.

The fund is an addition to the investment strategies available for cross-border distribution within AllianzGI’s Luxembourg-domiciled Sicav umbrella and will be available to investors across Europe.

The fund manager, Matthias Born, is also in charge of the Concentra fund, which has outperformed Germany’s DAX in both rising and falling markets since he took over management in 2007. He also manages the Allianz Euroland Equity Growth fund and co-manages a total of €7.5bn in European growth strategies.

Born said: “The fund will provide a diversified, one-stop access to the German economic strength. German equity market valuations are moderate by historical standards in terms of price/earnings and price/book ratios, making the region a top pick for investors.

“The German corporate sector is a perfect environment for our investment strategy, which is focused on high quality business models that have unique competitive advantages driven through strong brands or innovation.”

Nick Smith, head of retail sales in Europe (ex Germany), added: “Allianz GI is responding to the changing investment environment by delivering solutions for investors in two developing but discrete areas: risk- or outcome-orientated solutions for those with a ‘safety first’ perspective, and specialist, return-orientated strategies for investors seeking alpha.

“This new fund falls into the latter category and we expect to see interest from investors across Europe.”

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