‘Don’t lose money’ is a useful philosophy for turbulent markets, but many managers have forgotten it, DekaBank’s fund-based investment team suggests.
Cushioning future blows
Investors aiming only to beat money markets will end their lives poor. It is a dilemma being tackled by financial advisers, European asset managers including DekaBank, and even Berlin.
Steffen Selbach (pictured) says: “The typical retail investor [in Germany] is quite content with an insurance product producing 1% to 2% because that is still a positive return. A lot of people think hitting only 1.8% annual return, or making more yield than an average bond investment, is still positive and they can sleep nicely with that.”
Even if equity markets rise for years – a highly unlikely scenario – Selbach says the pain of 2000-01 and 2008 was too much for retail investors to embrace higher yielding asset classes of their own volition in the short term.
To help them, DekaBank launched a series of risk-profile funds early this year, each with an individual ‘safety net’ underneath, limiting losses – “a kind of bridge-point… to put investors back into higher yielding capital markets.”
About €500m flowed in within four months.
It launched the Deka-Vermögenskonzept (wealth concept) to provide clients more “personalised, individual support and bespoke solutions for investing their cash”.
It is best suited to investors with horizons of at least five years and preference for individually configurable services.
The service allows clients to select graded allocations that match their personal preferences – for example, to equity exposure.
To encourage consultation between advisers and customers, Deka-Vermögenskonzept signals to advisers to organise meeting clients when portfolio performance either over- or undershoots predetermined marks.
One variant of the service, ‘Aktiv’, distributes investments across various countries, sectors and asset classes.
‘Balance’ concentrates on the eurozone, with allocation quotas constant over time. Each variation is offered through three strategies: limiting losses, preserving capital and profits.