It had gradually become evident during the course of 1999 that while the specialised investment funds investment medium saw continued high-level expansion, the quite dizzy rates of growth seen in 1997 and 1998 could not be maintained. This continued even more emphatically in 2000: the development of securities-based specialised funds was characterised by growth rates that were still high, but slowing. Specialised real estate investment funds continued their upwards trend unchecked (cf. Kandlbinder in: Kreditwesen, vol. 14/2001, pages 497–506; and “SPTFs are ideal for investors”, IPE, July–August 2001, pages 42–4).

Continued slowing of growth rates…
Although net sales receipts (see Table 1) of the specialised investment funds during 2000 were a good 23% lower than the year before, at e45.5bn, this was still a good 40% up on what was at the time the first peak year of 1996, making it the fifth highest inflow of funds into specialised investment funds in any one calendar year. Specialised investment fund volume rose in 2000 by ‘only’ 7.6% (in 1999 and 1998: 28.4% and 31.2% respectively), but at e36bn in absolute terms is still considerable in view of stock market trends (see Table 2). As a result, the share of sales receipts flowing into the investment funds branch fell sharply to 53.4% (in 1999 and 1998: 61.2% and 77% respectively), but in terms of the whole volume of the investment funds market actually improved slightly to 62.6% (1999: 62.4%, having peaked the previous year at 64.3%). If the foreign funds of German provenance open to the general public (volumes in Luxembourg e112,289m, Ireland e10,844m), together with their sales receipts (Luxembourg e18,370m, Ireland e5,046m) are also taken into account for 2000, the decline in the respective specialised investment funds shares is even sharper: in terms of sales receipts to 43.1% (previous year: 56.1%) and in funds volume to 54.5% (previous year: 54.8%) of the respective total investment funds market.
The declining, albeit in overall terms still expanding, momentum in specialised investment funds development in 2000 is also evident in the figures for new fund issues: in the year under review, according to Bundesbank statistics, these numbered 499, compared to 583 the previous year and 737 the year before that, which is approximately 84 fewer new specialised investment fund issues in 2000 than in the previous year. In 2000 there were ‘only’ around 10 new specialised investment fund issues per calendar week, or approximately two per banking day, compared to 14 per week, or almost three per banking day in the boom year 1998.
Two new specialised investment funds per banking day still points to a boom for specialised investment funds as an investment vehicle – especially if we consider that this represents a net figure from newly established funds minus closures, and if we also know that on average, the number of specialised investment fund closures per month in 2000 was, surprisingly, 20. But we will return to this aspect in the section of observations on the insurance companies’ investment trust companies.

... but no further decline in 2001
In the first four months of 2001, net receipts in the specialised investment funds (excluding specialised real estate investment funds) totalled e13,417m, an average of e3,354m per month, markedly less than in the two previous years 1998 (e5,571m per month) and 1999 (e4,821m per month), but reasonably stable compared to the same period of 2000 (e3,269m per month).
By contrast, sales of German investment funds open to the general public (excluding real estate investment funds) fell by almost half in the first four months of 2001, compared to the same period of the previous year, at e11,219m, or e2,805m per month.
As at the end of April 2001, the figures for investment fund numbers and fund volumes (excluding real estate funds) are as follows: 706 equity-based investment funds open to the general public (including mixed funds and old-age provision special assets), with a fund volume of e160,543m, account for 21% of the total funds volume of the investment fund branch (excluding real estate investment funds). Three hundred and twenty nine money market and bond funds open to the general public, at e84,335m, represent about 11.0% of the entire funds volume of the investment fund branch (excluding real estate investment funds).

New fund types weigh more heavily …
As of April 2001, however, there were already another 121 investment funds open to the general public, namely 118 holding funds (fund of funds), and three mixed security- and property-based special assets, which at this stage can only be deduced from the Bundesbank’s capital market statistics, with a volume of e11,421m, or 1.5% of the investment funds branch (excluding real estate investment funds).
Additionally, however, as at the end of April this year, 5,483 specialised investment funds (excluding specialised real estate investment funds) with an average volume per fund of over e92m (the previous year, as at the end of May 2000, the figure was almost e101m), achieved a total funds volume of e508,036m, again representing a higher (66.5%) share of the total funds volume of the investment funds branch (excluding real estate investment funds) of e764,035m. Something else that can now be deduced from the Bundesbank’s specialised investment funds statistics is that the new fund types, specialised investment holding funds and, in theory, mixed securities- and property-based special assets, are increasingly taking on a life of their own as specialised investment funds.
As at the end of April 2001 there were 32 holding funds in the form of specialised investment funds, with a total fund volume of e532m. In April 2000, there were – based on the same type of deduction – 11 specialised holding funds, with a volume of e394m.

… which will accordingly appear in the Bundesbank statistics soon
As of April 2001, the volume of these holding funds in the form of specialised investment funds is distributed as follows (calculated by the process of deduction described above from the Bundesbank capital market statistics, namely from ‘Table VI Investment Trust Companies 5. Number, Receipts and Assets of domestic specialised investment funds by holders and employment of earnings’):
q e387m specialised holding funds of credit institutions;
q e26m specialised holding funds of insurance companies (including pension funds);
q e105m specialised holding funds of ‘other companies’ (according to the Deutsche Bundesbank’s definition of investor groups), and
q e15m specialised holding funds of non profit-making private organisations (eg, churches, political parties, trades unions, associations).
Fortunately, the Bundesbank has now indicated that during 2001 these new types of funds will also be included in the statistical coverage, so that the classification of funds will once again read “including … all fund types” and the crosswise additions will agree with the totals line, and we are no longer instructed to deduct “amongst them … selective fund types” from the totals line in order to calculate the balances/receipt types for fund types not previously shown individually.
In net terms, the number of newly-established specialised investment funds, according to the Bundesbank’s capital market statistics so far over the course of 2001 has once again slightly increased compared to the reduced number for the whole of the previous year: 172 new fund issues in the first four months of 2001 represent de facto (with 81 banking days from January–April 2001) 2.1 new specialised investment funds per banking day, compared to less than two “only” over the whole of 2000.

Equity quota static, but foreign proportion climbs again
The asset distribution weighting of the securities-based specialised investment fund has clearly shifted, but in opposite directions for the equity quota on the one hand and the foreign share on the other (cf. Table 3): while the equity quota had been rising for some years, from 36% at the end of 1997, 38% as at 12/1998 to 46.2% as at 12/1999, it had fallen back at the end of 2000 to 44.5%, and as at 04/2001 down again, to 42.6% (cf. Chart 1) – hardly surprising given the general trend on the equity markets. All the more remarkable is the fact that, over the same five-year period, the foreign proportion in specialised investment funds has not only risen continuously, from 18% in 1996, 23% and 30% at the end of 1997 and 1998, to 42.7% and 49.5% at the end of 1999 and 2000 respectively, but as at 04/2001 broke through the 50% barrier for the first time (cf. Chart 1). At the end of 2000, and again at the end of 04/2001, the quota of equity foreign investments alone is greater than the proportion of investments in domestic fixed-interest securities. In any case, equity foreign investments have to date always exceeded equity domestic investments many times over since 1999, although this ratio had previously always been reversed, and was only in equilibrium at the end of 1998.

Rises in value, but only for bond funds
From the Bundesbank capital market statistics (see Chart 2) can be determined the changes in value for 2000 in specialised investment funds, as well as the receipts and volumes (the same is naturally true of the investment funds open to the general public): specialised investment funds volumes as at the end of 1999, less executed distribution of income for 2000 plus net receipts in 2000, give the calculated value for fund volume as at December 2000. If we look at the latter in relation to the actual values for specialised investment fund volumes as at December 2000, the effective change in value in 2000 can be calculated, and even subdivided into bond, equity and mixed specialised investment funds. However, the capital gains/capital losses realised in specialised investment funds cannot be derived from these, as they are difficult to calculate more conclusively. With this type of observation, it is no wonder that there appears to be nothing good about the year 2000 for the specialised investment fund, but even more so for the markets: the new undisclosed reserves in securities placements by the specialised investment funds therefore saw a general decline during 2000, and in the case of equity funds were actually negative in absolute terms. These cushions, which in French are strikingly known as “réserves occultes”, barely grew at all in the specialised investment funds, and in the equity funds actually shrank.

On the structure of holders of specialised investment funds
This year, it is satisfying that all 59 investment trust companies (as well as all 55 members of the German Federal Association of Investment Companies and the four investment trust companies that issue specialised investment funds but are not members of the Association) took part in the author’s 2000 year-end survey of investment trust companies; as at the end of 2000, according to Bundesbank statistics, these companies were managing some e507.8bn of the specialised investment funds volume (excluding specialised real estate investment funds) (cf. Table 4). Accordingly, it was possible once again to include 100% of the specialised investment fund volume in the survey. The analysis of the survey results shows a figure of e507,995m, slightly different to that given in the Bundesbank statistics, but this can be disregarded and is quite understandable in view of the magnitude of the figures involved.

Number of new funds rises by 10%
In the first place, it must be noted that in 2000, the specialised investment funds market (excluding specialised real estate investment funds) has continued to expand, albeit not quite as much as in previous years. The entire funds volume of the specialised investment funds (excluding specialised real estate investment funds) rose from e473.8bn at the end of 1999 to e508bn at the end of 1999, a rise of e34.2bn (previous year: e104bn) or 7.2% (previous year: 28.2%). According to replies to the survey by the author, the number of funds (excluding specialised real estate investment funds) increased by 485 funds, or 10.1% (previous year: +13.4 %), from 4,805 at the end of 1999 to 5,290 specialised investment funds (excluding specialised real estate investment funds) as at the end of 2000 (Bundesbank figures show 4,798 specialised investment funds at the end of 1999 and 5,287 specialised investment funds as at the end of 2000 – this difference too can be explained internally and may be disregarded). In this market, which in overall terms is still growing, the relative sizes of the different investor groups are as follows:
1. The insurance industry and institutional pension funds still constitute the most important investor groups, with a share of specialised investment funds volume of 52.7% (previous year 52.2%); this share has increased both in absolute terms (plus e20.2bn specialised investment fund placements, compared to plus e61bn the previous year) and in relative terms, inching back to the peak share of 53.2% reached in 1997. The insurance industry investor group in particular is also represented in the specialised investment funds investment medium, with a share of almost e29bn in 2000, while the ‘institutional pension funds’ investor group ‘Altersversorgung’ not only saw its share fall from 17.1 to 14.2%, but also fell in absolute terms by approximately e8.7bn.
2. While the second most important investor group of business enterprises, which can be subdivided into two distinct subgroups, may have barely maintained the relative shares of the previous year in overall terms, a detailed view of the situation shows a completely different trend:
l what are known as the banks’ own security deposit funds (so-called Depot-A funds), with a share of the specialised investment funds volume rising to 24.0% (or in absolute terms +e16.4bn new specialised investment fund placements, compared to + e18bn the previous year), in which the savings banks and co-operatives sector institutions are particularly strongly represented, and
l those business enterprises whose share of the specialised investment funds volume has fallen to 14.3% (compared with 16.3% the previous year), and whose specialised investment fund placements serve largely as “capital with societal restrictions on individual property rights”, that is, the “funding” for pension provisions (in absolute terms, receipts of these specialised investment fund placements fell by e4.7bn, compared with +e14bn the previous year).
3. The relative share of the group of other licensed specialised investment funds investors has risen, after two years when it remained static, to 7.1% and in absolute terms the total sum invested has increased by almost e6bn (the previous year also saw a rise of almost e6bn, but with a static relative share).
4. Placements in specialised investment funds by the social insurance institutions group have fallen sharply by almost e3.4bn, compared to the previous year, to a relative share of 1.3% (from a 2.1% share the previous year). Placements in specialised investment funds by the social insurance institutions group have therefore fallen back to the low levels of 1997 and 1998.
5. The specialised investment fund volume attributable to the foreign group of specialised investment fund holders is static (in absolute terms down by approximately e255m) and has fallen to a relative share of 0.6% (previous year 0.7%). Analysis of another set of statistics from the Bundesbank (cf. Chart 3) even shows that during 2000 there were in effect substantial flowbacks from specialised investment funds by non-German investors, even though the number of specialised investment funds held by non-German investors has in overall terms remained much the same. The reluctance of non-German investors to participate in the specialised investment funds sector (excluding specialised real estate investment funds) remains a phenomenon which is difficult to explain rationally, especially if we consider how heavily non-German institutional investors are committed to direct investment on the German capital market.

Explainable differences from Bundesbank statistics
If we consider the fact that the aggregation categories between the Bundesbank and the survey by the author are different and dissimilar in coverage, it may be confidently stated that the results are de facto not that different, as may be discerned from Table 5 in the ‘Crossovers from the author’s survey to the Bundesbank statistics’. In relation to the scale, demarcation differences of several billion euros can effectively be disregarded. The Bundesbank heading ‘insurance companies’ shows around e11.9bn less than the author’s ‘insurance industry plus institutional pension funds’ investor groups. By contrast, under the Bundesbank heading ‘social insurance institutions’ there are around e5.3bn more than in the ‘social insurance institutions’ group as defined by the author, which excludes public supplementary pension funds, because in the author’s survey the public supplementary pension funds are included in the institutional pension funds group. As in the previous year, the heading ‘other enterprises’ remains the largest difference in relative terms, with the Bundesbank statistics showing some e18.2bn more than the results of the survey by the author, although the “credit institutions”, with approximately e2.9bn more in the Bundesbank statistics, is hardly crucial, any more than are the e550m less shown in the Bundesbank statistics for non-German specialised investment fund holders than in the author’s study.

Different systematics
Apart from the various types of classifications in the Bundesbank statistics on the one hand and the author’s survey on the other, other system-based approaches may also produce different results: for example, the corresponding Bundesbank questionnaire only leaves room on the pre-printed form 10380 for one kind of unit-holder under the heading “unit-holder type”, which – if there is more than one – the main type of unit-holder then has to check. In his survey, however, the author intentionally emphasises in each case the exact fraction of volume of the funds sources per fund for each partial individual unit-holder. This different system therefore certainly makes it possible, to give an extreme example, for three specialised investment funds with a volume of three times 100 units which in each case predominantly belong to one investor from the insurance branch, but 49% of whose volume is in each case held by non-German investors, are shown, quite correctly, in the Bundesbank statistics at 300 volume units under the investor heading “insurers”, but in the author’s survey are shown as 153 units for the insurance investor group, on the one hand, and as 147 units for the investor group “foreign specialised investment fund holders”. So in practice, it certainly seems from the Bundesbank data that in the case of specialised investment funds which have an ownership of 51 to 49, the “predominant indicator” will have to be changed next month, even where the inflow of resources from one holder is insignificant.

Market shares of specialised investment fund providers
Once again, the insights shown by the distribution of the investment trust company (ITC) groups’ market share as at the end of 2000 are informative (see Tables 6, 7 and 8): with the volume of the market as a whole still rising by a good 7% (previous year + 28%), the previous trends of the relative shifts in market share are continuing, even more emphatically than before. The specialised investment funds volumes of the investment trust companies of the major/ regional banks are no longer growing strongly, following the merger of two investment trust companies (DCI is being taken over by dbi), but have fallen back by almost 4.4%, which means that in relative terms, too, the market share of this ITC group is falling. This statement applies in almost the same way to the private banks’ investment trust companies, whose funds volume is static, despite the admittance of another specialised investment fund provider (Monega), and whose relative share of the market has therefore fallen to 13.6% (previous year 14.6%).
The ITCs of the savings banks and Central Savings Banks have grown in line with the trend, and have accordingly maintained their almost one-fifth share of the market. The ITCs of the co-operative banks, at a relatively lower level, have been doing rather better than the trend, improving their position in the market to 5.5%, which means that in each of three consecutive years they have increased their market share by one tenth of 1%, having started in 1996 with a market share of under 5%. The biggest jump in specialised investment funds in 2000, long heralded by the new start-ups, has been by the now 16 investment trust companies that represent insurance interests. Newcomers here are the ITCs AM Generali, Delta Lloyd, GCR, Nordcon, Swisslife and Talanx, which may well also have taken with them much of the specialised investment fund volume of the investment trust companies of the big banks and regional banks, as well as of the private banks, which explains why their fund volumes have fallen or remained static. The insurance ITCs increased their managed funds in 2000 in terms of numbers by 22% and in terms of volume by + 35.1%, so that they now have a 19.5% share of the specialised investment funds market (compared to 15.5% the previous year) and have almost caught up with the market share of the investment trust companies of the savings banks and Central Savings Banks.

Massive shifts between ITC groups
The fact that insurance enterprises shifted huge volumes from their specialised investment fund during 2000 into their own investment trust companies can also be deduced from the investment statistics of the federal supervisory office for insurance companies (BAV): figures published quarterly by the BAV show not only substantial new investments by the insurance enterprises in specialised investment funds, but also a considerable number of fund closures (Chart 4). This chart means quite simply that more than 40% of gross investments in specialised investment funds by insurance enterprises are derived from fund closures. Interestingly, the large number of specialised investment fund retirements among insurance enterprises, especially in the fourth quarter of 2000, corresponds with another figure from the Bundesbank’s capital market statistics, which show that in November 2000, the 75 specialised investment fund start-ups contrast with the extremely high number of 43 specialised investment fund closures. Apart from that, it seems highly likely that the shifting of specialised investment fund volumes by the insurance enterprises into such investment trust companies, which are owned by the insurance enterprises themselves, and which had started as early as 1999, is still not complete, and will continue during 2001.
No less spectacular was the growth in 2000 of specialised investment funds among investment trust companies that are subsidiaries of foreign banks. Two investment trust companies have left this group (Brinson and the restructured SIM into insurance enterprise ITCs as DLD-SIM), and one new ITC has joined as the result of a change of shareholder (BfG-SEB); the remaining 17 investment trust companies in this group increased their specialised investment fund volume in 2000 by more than one quarter, and the number of new fund issues by one third. The market share of this ITC group has therefore risen to 7.1% (compared to 6% the previous year).
The heterogeneous group of ‘Other Investment Trust Companies’ fell slightly in 2000, in both absolute and relative terms (market share now 4.2%, compared to 4.7% the previous year), but is still significant because of the heavyweights it includes (Siemens KAG and Postbank Invest), and more will certainly be heard from it in the future with new developments.

Microanalysis of market shares by ITC groups
The view of the global market share is even more informative if the market segments are arranged with the individual ITC groups and then broken down accordingly, as in Table 9. However, it has been taken into consideration that in the ITC groups of the co-operative banks, firstly, and secondly of the ‘others’, there are only a few ITCs in each, of which again in each case one or two dominate in terms of volume in such a way that individual conclusions may be drawn. With the classification of market share on the basis of structure of the specialised investment funds holders (Table 4) to the ITC groups as defined in Table 6, both of the ITC groups referred to above (co-operative banks and ‘others’) have therefore been omitted.
Even if ‘only’ 90.3% of the whole specialised investment fund volume is included in this survey, Table 9 nevertheless provides some surprising insights, because for each ITC group observed, the whole fund volume of the relative ITC group is recorded and hence the comparison with a range of previous years is possible.

Some marked shifts
The shifts in the investor structures for each of the ITC groups in 2000 were at times quite marked compared to 1999, and the following points stand out:
1. The insurance industry is still, naturally, most strongly represented “among its own kind” with its specialised investment funds, and is continuing to build up this share, with + e26.5bn in 2000, and then among the ITCs of the private banks (albeit in this case only + e700m), and then among those ITCs which are foreign bank subsidiaries, on a static or relatively downward trend (only + e0.4bn), and penultimately among the ITCs of the major and regional banks (in this case there was relative growth, but the figures were static in absolute terms, up only e130m). The proportion of specialised investment fund holders which are attributable to the insurance industry remains in relative terms smallest among the ITC group of the savings banks/central savings banks, and declined further in 2000 in relative terms, although in absolute terms there was some growth in placements by this group, amounting to e0.9bn for the ITCs of the savings banks/central savings banks.
2. Placements in specialised investment funds by the (German) social insurance institutions (SII) group have individually developed in a most idiosyncratic way, with the overall trend downwards: the sharp falls in specialised investment fund placements by SIIs have affected mainly the ITCs of the private banks (–e3.9bn) and of the insurance interests (–e774m), while the investment trust companies of the other provider groups recorded increases both in relative and in absolute terms, with the ITCs of the big banks and regional banks up e500m, those of the savings banks and central savings banks up e435m and the foreign bank subsidiary ITCs up e273m.
3. Despite the generally downward trend, institutional pension funds are increasingly represented in the ITC groups of the private banks (at +e1.9bn), those of the savings banks and central savings institutions (at +e0.7bn) and the foreign bank subsidiary ITCs (at +e3bn). The general downward trend of placements in specialised investment funds by the institutional pension funds group, however, is clearly confirmed among the ITCs of the big banks and regional banks (at –e12.7bn) and those of the insurance interests (at –e0.9bn). In second place is this institutional pension funds investor group, which already has its placements in specialised investment funds in the ITCs that are foreign bank subsidiaries, and the trend is rising strongly.
We can be fully justified in concluding from the strong and still rising share of this investor group in the foreign bank subsidiary ITCs that those institutionals which are increasingly looking to invest outside Germany and outside the EU/EEA therefore have a particularly strong presence there, because they want to ‘buy’ the know-how of the foreign markets from the foreign parent companies of those ITCs.
4. Once again in 2000, however, the most striking fact was a definite structural change in the business enterprise specialised investment fund holders, and within this group under the heading of “credit institutions, own security deposits so-called Depot-A_funds”: while total placements by this group (see Table 4) have fallen in relative terms (despite additions in absolute terms of + e11.7bn), the trend lines are running in different directions, with the business enterprises on the one side and the credit institutions on the other – and this is even more true if we consider the specialised investment fund placements of this holder-group among the various provider groups in detail.
Placements in specialised investment funds by business enterprises (excluding credit institutions) have continued to grow only in relative terms among the ITC group of the big banks and regional banks from 20.4% to 20.7%, while in absolute terms they fell by e0.9bn. Among all other provider groups observed, the placements in specialised investment funds by the business enterprise group (excluding credit institutions) have declined, sometimes sharply in both relative and absolute terms. By contrast, in 2000 the placements in specialised investment funds by credit institutions in all ITC provider groups rose sharply in both relative and absolute terms: in the ITCs of the big banks and regional banks, for example, by +e4.5bn, in those of the private banks by +e735m, in those of the savings banks and central savings banks by +e6.7m, in the ITCs of the insurance interest by +e470m, and in the foreign bank subsidiary ITCs by +e2.5bn. This means that the ITCs of the savings banks and central savings banks have once again reverted to the image of being the own security deposit service provider for the savings banks, one that they have tried to shake off in the past, while the foreign bank subsidiary ITCs are certainly happy with their further success on moving into the own security deposit business with an additional e875m.
5. In the specialised investment fund management for the investor group of other licensed specialised investment holders, the winners in 2000 were in fact all the ITCs – with the exception of the ITCs of the insurance enterprises. Once again, it has to be assumed that the reason for the strong specialised investment fund growth in this investor group in the ‘foreign ITCs’ was that even the ‘charities’, with their placements in specialised investment funds going increasingly outside Germany and outside the EU/EEA, and by choosing ‘foreign ITCs’ looking to ‘buy into’ the market know-how of the parent banks on their home stock markets.
6. In 2000, the business segment of foreign specialised investment fund holders shrank, not only in relative, but also in absolute terms, which has already been commented on in the observations on Table 4. Nevertheless, two ITC groups managed slightly to increase their relative and absolute shares of the remaining volume of non-German specialised investment fund holders, namely the ITCs of the insurance enterprises, by + e322m, and the ‘foreign ITCs’, by +e193m.

Average fund’s volume shrank for the first time
In this regard, however, the following finding is interesting: the average size per specialised investment fund (excluding specialised real estate investment funds) across the entire branch as of December 2000 (according to survey, fund assets e507,995m; 5,290 specialised investment funds) has fallen to e96m (previous year e99m), the first fall after years of continual growth in the average size of specialised investment funds. The analogous figures for the different ITC groups are shown in Chart 5.
This means that the volumes of the specialised investment funds of the private bank ITCs, as well as those of the major and regional banks, are close to the average; the latter conspicuously, the former only just below. Not only are the volumes of the specialised investment funds of the insurance interests the only ones to increase, but at more than two and a half times are clearly above average, those of the specialised investment funds of the ITCs of the foreign banks, and also those of the savings banks/central savings banks and co-operative banks are still well below average. The volumes of the specialised investment funds of the “others” ITC group, by their excessive size, constitute a peculiarity which must be seen for what it is.

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