The German fund industry association, BVI, has developed a Spezialfondsindex to follow the average performance of investments held in Spezialfonds by domestic institutions.
The Spezialfondsindex has traced performances since 2009, considering data on 2,700 securities-based Spezialfonds. BVI has also taken into account monthly returns of individual funds based on net change in fund assets, inflows, outflows and dividends.
Pension funds with interests in security-based open-ended Spezialfonds have recorded returns of 4% per year since 2009, on par with non-profit organisations, and banks of 4.6% per year, while insurance companies and non-financial institutions posted 3.6% returns.
In the past five years returns fell steeply with German pension funds achieving annual returns of 1.4%.
The Spezialfondsindex has increased from 100 to 167.2 points in the period 2009-22, corresponding to an average annual return of 4.1%, the association said.
In comparison, the MSCI Europe index and the ICE BofA Euro Government index recorded performances of 7.01% and 2.17%, respectively.
The lower performance compared with equity index is the result of allocations, BVI said, pointing out that Spezialfonds domiciled in Germany held only about 15% of fund assets in equities, 43% in bonds, with around 28% in other investment funds and 14% in other forms of investments.
Furthermore, 62% of securities-based Spezialfonds’ assets are invested for pension funds, including occupational pension schemes, or insurance companies. Private non-profit organisations such as trusts, banks and non-financial corporations also use Spezialfonds as vehicles for their investments.
The index also showed that, because of larger allocations to bonds, the shares held in Spezialfonds by German investors are less volatile than equities, with annual returns fluctuating around 4% of the main value, compared with 13.67% for equities and 5.04% for bonds.
Spezialfonds achieved higher returns in the period 2009-22, with a Sharpe ratio of 0.98, compared with European equities at 0.57 and government bonds at 0.47.