Amid year's volatile share markets German fund managers closed more equities funds than they opened, while an expected rotation into multi-asset products was evident by a net increase in the number of products in that category, according to Germany's fund trade body.
Amid year’s volatile share markets German fund managers closed more equities funds than they opened, while an expected rotation into multi-asset products was evident by a net increase in the number of products in that category, according to Germany’s fund trade body.
The Bundesverband Investment und Asset Management (BVI) said 110 equity funds were launched last year, but 170 were dissolved. This was the highest number of dissolutions of equity funds since at least 2001 – except for 2008 at the height of the credit crisis, when 171 share funds were shut.
Similarly for fixed income funds, there were more funds closed down (104) than opened up (98) last year. With the exception of 2009, this was the strongest trend in fixed income fund closures since at least 2001.
By contrast, 128 launches of ‘Mischfonds’ (mixed funds) outnumbered the 93 closures in that segment.
“The strong wish of investors for a risk-dampening distribution of capital across various asset classes has encouraged firms to offer more mixed funds,” the BVI said.
It noted that net contraction of the number of funds run by German managers that are its members has been a trend since 2007, when the 1,113 new products launched were more than double the number that were opened last year.
Overall, 436 mutual funds were ended, while 419 were begun. The number of new start-ups was the lowest number since 2004.
Funds whose closure was expected because of their design were not included in the BVI’s calculations.
German fund allocators expect movement towards mixed-asset funds, which cast a wider net over various asset classes, to be a strong trend among fund buyers this year.
Andreas Gruenewald from the Verband unabhaengiger Vermoegensverwalter (Association of Independent Wealth Managers) said recently that in 1999-2000, as shares and leveraged products “shot upwards”, many allocators said funds spread across numerous asset classes seemed “too boring from the perspective of performance.
“I was active as a wealth manager myself, my business has run mixed funds for more than 10 years, and we experienced times when mixed funds were absolutely not in demand.
“Institutional investors wanted clear ‘building blocks’, and to be responsible for their own asset allocation. But now the topic of ‘mixed funds’ once again is appearing ever more, and the products are being requested often. It is not about knowing the future precisely – no-one can in any case – but about being prepared for the future.
“This is the task of wealth managers – not only to explain the clients what will probably happen in the future, but also to make clear to the client what is suitable for his risk/reward profile…and to invest in a diversified way in shares and other asset classes.”