Sellers depressed, buyers optimistic in Germany – accelerando survey
A sharp difference of attitudes between fund buyers and sellers in Germany has been highlighted in the latest research into the market by distribution consultant accelerando associates.
Sellers remain pessimistic in their outlook, the results of the latest Focus Report – Fund Distribution in Germany 2014 to be published 15 June (www.accelerando-asssociates.com).
Despite overall European fund flows being strong through 2013, a majority, 55% of those questioned – senior sales people, Germany country heads, and European country heads across large, SME and boutique managers – said the past 18 months had been challenging.
Looking forwared, those same interviewees were even more pessimistic: while some 19% said the past period had been ‘good’, just 12% expected the coming 18 month period to also be good.
The next year and a half will be ‘challenging’ for 46%, whiel 42% said that it would be ‘challenging but good’.
Those in charge of sales into Germany expect the most growth from institutional investors (58%), while a similar proportion expect a move away from open toward guided architecture. A third, some 31%, do not expect such a shift toward guided architecture.
Those in charge of selling are also facing increasing demands from clients for improved service levels. Some 27% of those responding said that fund buyer expectations regarding service levels have ‘increased sharply’.
And sales staff generally are facing a situation in which traditional sales skills are taking second place to intellectual capacity, a sound 360-degree asset management industry understanding, and regulatory knowledge, accelerando associated notes.
Buy side optimism
Those on the other side of sales have expressed a much more optimistic view of the market, the survey results suggest.
Fully 65% of fund selectors interviewed expect a ‘good but volatile’ period giong forward against 26% who expect a ‘challenging’ future.
Despite Germany typically being seen as a market for fixed income, the survey of fund selectors found equity was the asset class favoured by some 65%, with alternative investments at 26%, and fixed income around 9%.
Within equities, the survey found European equities were most sought (39%), followed by emerging markets at 35% and frontier markets at 11%.
Accelerando associates says this finding is “remarkable considering the huge outflows in emerging markets funds in early 2014.”
Japanese and global equities scored well also, but North American equities did not. Overall, some 70% of respondents said they favour a value approach for equities.
In the area of alternative investments, private equity was most favoured among the fund buyers, followed by hedge funds/hedge funds Ucits and commodities.
“The German fund selector survey clearly shows a return to risk,” said Philip Kalus (pictured), founder and managing partner of accelerando associates.
“However, it seems to be a lot harder for fund providers to benefit from this these days.”