GERMANY - More than 60% of German institutional investors believe equities will generate returns over the coming year, yet 51% fear there will be a double dip in the markets, according to a poll conducted by German asset manager Union Investment.

Union canvassed 250 institutional investors - with combined assets under management of more than €350bn - who attended the company's recent risk management conference in Frankfurt.

The majority of respondents (57%) to Union's survey said the markets were likely to create more opportunities than risks for their investments next year.

Roughly one-third said they agreed with the statement that "There is no such thing as a 4-6% return with minimal risk, but many investors still believe there is".

For further diversification, 40% said they were considering emerging market securities, but more than 20% said they would not engage in currency speculation.

A quarter of respondents said they would be unlikely to diversify into non-liquid assets such as timber, shipping or infrastructure given the low-interest rate environment.

More than 40% pointed out that the diversification effect was very limited during the financial crisis, while 47% said it had worked even in difficult times and only a minority said it had not worked at all.

Apart from equities, the next largest share of investors (16%) said alternative investments would offer the best opportunities over the next 12 months.

The biggest risks were seen in government bonds, cited by 55% of investors, followed by interest rate changes and currency turbulences (17% each).