GERMANY – The chief executive of Commerzbank’s fund arm Cominvest expects up to €700m in inflows this year – on top of broadly unchanged assets under management in 2004.
Chief executive Friedrich Schmitz Cominvest told IPE that following consolidation of the institutional business last year, the outlook for 2005 was somewhat brighter. “For the current year, we expect inflows on the order of between €500-€700m,” he said.
The firm reported that its institutional assets under management were broadly unchanged in 2004 at €28bn, largely because of the break-up of several mandates related to so-called “master funds”.
It said the break-up of the master fund mandates was chiefly behind outflows totalling €258m.
In a master fund, back-office administration of institutional funds are consolidated within one provider, thereby reducing costs and boosting efficiency. As these mandates involve back-office administration instead of portfolio management, they are not very profitable.
Schmitz noted that the decline in Cominvest’s master fund business was being somewhat offset by an increase in advisory mandates. Last year, the asset manager recorded a net €5m inflows for this business area, he said.
Meanwhile, Commerzbank itself recorded net outflows of €3.2bn for 2004, almost all of which were on the retail side. It said the decline was in large part due to a surge in domestic demand for certificates. German certificates resemble investment funds that are indexed to a certain benchmark.
Despite the net outflows, Commerzbank said its total AUM was unchanged at the end of 2004 at €102bn. Cominvest, which includes the retail fund arm ADIG, makes up €52bn of the total figure. The other parts of the business are France’s CCR and Jupiter of the UK.
Operating profit at Commerzbank’s asset management division almost doubled to €167m in 2004 from €90m in 2003. For the current year, the bank expects a further improvement, led by efforts to boost sales of Cominvest funds in Germany and elsewhere in Europe.