Germany’s Union Investment reports €9.9bn new business, assesses outlook
German asset manager Union Investment reports it is back on track for growth. In 2012, it secured net new business of €9.9bn. (2011: net outflow of €1.5bn).
At the year end, assets under management had risen from €170.3bn to €190.5 bn, a new record high. Profit before taxes rose to €307m (2011: €266m).
“2012 was a good year for Union Investment – despite the ongoing eurozone debt crisis and highly volatile securities markets at the beginning of the year,” said Hans Joachim Reinke (pictured), chief executive officer, at a press conference.
“As well as strong portfolio management, this success is primarily the result of focusing our products and services on changing customer needs.” He said last year was characterised by a steady upward trend on the capital markets. “The politicians’ success in getting systemic risk off the agenda for the time being was rewarded by the markets during the course of the year.”
This was why the capital markets had performed better than predicted at the start of the year – despite the early volatility and uncertainty among market players.
Funds delivered a positive performance in all asset classes with more than 90% of Union Investment’s securities-based mutual funds outperforming their benchmarks in 2012.
“However, that should not conceal the fact that the crises around the world are far from resolved and it will take some time to work through the adverse effects of the euro-zone debt crisis,” Reinke added.
With net inflows of €8.8bn (2011: €2.1bn), Union Investment maintained the growth in institutional business seen in previous years. “Measured by assets under management, we are a firm fixture at the top of this segment. Globally we are in the top 50, in Europe we are in the top 20, and in Germany we are in second place,” said Reinke.
In 2012, Union Investment recruited 41 new institutional clients (2011: 23) with €2.3bn to invest; 35 of them were from outside the cooperative sector.
Demand from abroad rose and accounted for nearly a third of net inflows in the institutional sector. “We are winning more and more international tenders and we now have a presence in European core markets as well as in Asia,” said Reinke.
Corporate bonds, dividend strategies, emerging-market bonds and real-estate funds were the focal points of the new business. It was noticeable that many customers had returned to controlled risk exposure in order to optimise their returns, the firm said.
Another striking aspect was that all minimum capital values in portfolios had again been maintained in 2012, despite the eurozone debt crisis and historically low interest rates.
Alongside rising demand for infrastructure funds, there was significant growth in sustainable solutions. “We are the leading German firm in this area and at the year end we had sustainable investments of €5.8bn under management, compared with €4.5bn at the end of 2011,” explained Reinke.
He believes sustainable investment will change from a matter of choice to a necessity for many customers in the next few years. “For certain institutional investors, sustainable assets are already very important, because they fit into their corporate business strategy. For others, they are another component for diversifying their portfolio, which optimises risk management,” continued Reinke.