Institutional demand drives German fund flows

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Following the recent record levels of inflows into the German fund industry, institutional investors are expected to remain key drivers, according to an accelerando associates survey conducted in Germany among 78 senior sales people.

The research revealed that the majority of respondents perceived fund sales in the past year as challenging but good, and expect this context to continue throughout 2015.

In terms of asset classes, 60% of respondents anticipate multi-asset products to generate the strongest sales. The report added: “However, it shall be noticed, that this is contorted by strong institutional demand for multi asset. The wholesale market seems rather saturated. In spite of good recent alternative Ucits growth in Europe, alternatives are not expected to generate real bonus for German sales people.”

Despite the significant expansion of the ETF sector, only 20% of respondents perceive them as competition, while 65% see their existing peer group as the biggest threat.

In line with 2014 fund flow trends, almost 70% of respondents see the strongest growth potential in the institutional segment, while the wholesale and retail sector are growing at a slower rate. At the same time, almost 40% of respondents acknowledge the growing importance of investment consultants within the institutional space, on average, about one quarter of institutional investors in Germany are using investment consultants.

Other key themes in the German market are the trend towards guided architecture (50%), and an increase of price pressures (47%). “Germany has always been a price sensitive market, predominantly in the institutional space. Respective headline news may be overrated. Our survey does not provide very strong evidence for increased price battles” the report stated.

At the same time pressures on the skillset of distributors are seen to be growing, with more than 50% citing the growing demand for regulatory knowledge and expected depth of information.

As for distribution strategies, more than 70% of senior sales people in Germanyt have mixed expectations of fund selector conferences while approximately 30% making use of active social media strategies in order to communicate with investors.

Mona Dohle
Mona Dohle speaks German and Dutch, she is DACH & Benelux Correspondent for InvestmentEurope. Prior to that, she worked as a journalist in Egypt and Palestine. She started her career as a journalist working for a local German newspaper. Mona graduated with an MSc in Development Studies from SOAS and has completed the CISI Certificate in International Wealth and Investment Management.

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