Strongest ever first half institutional flows helps Union boost assets by 6%

The strongest first half ever for institutional business and growth in retail flows has helped Germany’s Union Investments post a 6.2% increase in assets under management, to run €180.8bn.

The first half results released this morning included €6.6bn of new business, bringing total assets to “a historical high point,” according to Hans Joachim Reinke (pictured), chief executive officer of Union Asset Management Holding.

Institutional investors, including 14 new clients, put €6.2bn of new business into Union’s coffers. Importantly 11 of them came from beyond Union’s traditional catchment fields, and about one third of the new flows came from outside Germany.

Institutions wanted mainly corporate bonds, Pfandbriefe and emerging markets fixed income funds.

“It is important that we orient ourselves towards the changed regulatory surrounds of our institutional clients and develop solutions for them, which encompass as fully as possible topics such as Basel III und Solvency II”, said Reinke.

German private investors showed great reticence to commit more cash to investments last quarter – as shown by surveys conducted by Union itself – but Union’s apparently did not.

Those that are now Union’s clientele gave the firm €400m new business last half, according to the group.

However, Union said in a May survey almost two thirds of investors said ‘safety’ was the most important aspect when putting money to work, compared to just 55% who said this in 2007. Aiming for returns was most important for 31% of respondents back in 2007 – but it is for just 8% now.
“Money is being parked, and investment decisions are being postponed with an eye on the sovereign debt crisis in the Eurozone nations,” Reinke said.

He attributed the relative success at Union in drawing new money from investors – despite the backdrop – to the firm’s decision in 2006, to move from being a ‘product provider’ to providing solutions to the problems clients have.

In other first half news at Union, open real estate funds took in €1.2bn as a way to satisfy clients’ need for security and real assets; PrivatFonds took in €131m; clients opened 72,000 new savings plans and funnelled €449m into them; and the UniProfiRente Riester product took in €644m.

Union has put dealing with three topics at the heart of its business. Dealing with the changing capital markets environment is one. The changed role of the State is the second. Sustainability is the third.

In terms of the role of State’s compact with its citizens, Reinke foresees greater responsibility put on individuals for functions traditionally fulfilled by the social security system – for retirement, for health and education.

In terms of the State’s relationship to Reinke’s own industry, he foresees a change from being a provider of legal frameworks “ever more towards strict regulator”. Reinke pointed to the proposed financial transaction tax, which has this year led Union to say it will launch no new retail fund products if the tax as planned becomes EU-wide law.

Reinke said sustainability, the third of Union’s focal points, was not a new topic but is one gaining in importance. Over the past 18 months sustainable investment assets have grown from €1.5bn to €5bn, and about 50% of its institutional investors pay attention to sustainability as one criterion by which to diversify their investments. Union

Investment has 48 specific socially responsible investment products, and private clients have been able since July to invest in the savings plan UniNachWuchs.

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