German institutionals have catching up to do on new strategies – Söhnholz
GERMANY - Strategies such as absolute return, smart beta and socially responsible investing (SRI) may be catching on among German institutional investors, but they are still relatively "underrepresented", according to Dirk Söhnholz, Veritas's new chief operating officer.
Söhnolz worked for his own consultancy, which conducted a survey of about 50 German institutionals, before joining the ETF specialist last week.
In the survey, he said he saw no clear trend toward any single asset class, as German institutional investors' demands were "very heterogeneous".
But he did say that respondents had identified risk management and risk adjustment as their top priorities, and that certain strategies, currently "underrepresented" among German institutionals, would therefore grow in importance.
These would include responsible investing, smart beta and alternatives to cap weighting, as well as absolute return, he said.
"In the absolute return sector, I do not necessarily see a trend towards alternative investments, as long-only portfolios are also used," he said.
Söhnholz said the most important question investors now had to answer was who was doing the overlay.
Speaking in his new role as COO of Veritas, the former managing director at Feri Institutional Advisors, which he left in May 2011, predicted an increased use of ETFs within absolute return portfolios.
But he conceded that he did not foresee larger institutional investors making use of ETFs on a large scale in the near future.