German asset manager Union Investment has opened an office in London that will be managed by Nicolas Freyer, senior account manager UK.
Presenting the launch of the UK office in a press conference on 28 January, Alexander Schindler, member of the board of managing directors of Union Investment and Efama’s president, has provided some insights about the firm’s current shape.
Assets under management are amounting to €264bn, of which 60% (€149bn) come from institutional clients. In addition, Union Investment has recorded over €20bn in net inflows in 2015.
A few department heads of the German asset manager have shared their views on their respective assets classes during the conference.
So did Ingo Speich (pictured), head of Sustainability and Engagement at Union Investment. The company manages €11bn through SRI strategies.
Speich notably explained the Volkswagen scandal having occurred last Autumn has shown “how sustainability delivers added value and risk insights that cannot be caught through traditional company analysis.”
“We realised beforehand something was going wrong in the governance area. Governance ratings for Volkswagen were scoring low.
“VW’s rate was around 22% for governance whereas the average score was 53% for the rest of the automotive industry. In our sustainability portfolio, we then went underweight or even avoided Volkswagen,” he said.
“We did not see the scandal coming but we saw something was wrong. We have tried to meet Volkswagen executives but we have been told they were not able to do any meetings at that time. The reporting was not good,” added Speich.
Speich said the Volkswagen scandal remains an exception in the automotive industry.
He does not believe French constructor Renault, whose sites in the surrounding area of Paris have been recently searched regarding a possible fraud investigation linked to gas emissions, will follow the same path.
“We have met Renault representatives in their headquarters in Paris last December. We have had the feeling that, at least, from a legal standpoint, Renault was fine. We have to wait and see.
“Renault is not in the position Volkswagen was before the scandal happened. The VW case was related to the strong position of the former CEO, these of the head of the firm’s supervisory board and the lack of checks and balances in the company,” Speich argued.
Union Investment’s head of Sustainability and Engagement outlined the focus of the German asset manager was currently on carbon emissions released by companies.
Also, in the aftermath of the COP 21, Speich said he expects forthcoming stronger regulations at a local level for sectors such as utilities, oil, energy, mining, airlines and automotive.
ECB “must avoid Japanisation of Europe”
Frank Engels, head of Fixed Income at Union Investment, focused on the European Central Bank policy which, he said, has changed dramatically under Mario Draghi’s presidency.
“ECB is today pro-active in terms of policy stance with a pragmatic communication rather than dogmatic. The bank is led through small inner circles.
“Its structure has changed in the way decisions are being made. Draghi repeatedly surprised his colleagues in recent years,” Engels underlined.
The target of the ECB has changed as well. It focuses on the financial stability of the eurozone rather than on the price stability.
Engels highlighted a “very strong fear” of the markets to see Europe becoming the new Japan.
“The European Union could face the same fate Japan faced with deflation and stagnation in the 80’s and 90’s. A lesson learned by the ECB was that the Bank of Japan was way too inactive and has done too little too late to face this situation. The ECB does not want to make similar mistakes.
“A bunch of factors shows that the current situation in the eurozone and these of Japan in the 80’s-90’s are pretty much the same. Ageing societies, assets prices bubbles, adverse external shock…
“The eurozone crisis has been triggered by the subprime crisis like the Japanese scenario has been with the Asian crisis. Then the ECB needs to be pro-active in order to avoid the Japanisation of the Eurozone,” Engels warned.