mast image

Impact Investing

IPE special report May 2018

Sections

German institutions willing to increase risk but feel hindered, survey shows

Related images

  • St Martin's cathedral, Mainz, Germany

Related Categories

More than half of German institutional investors surveyed by Union Investment believe that fewer regulatory hurdles would allow them to improve their returns by at least 100 basis points.

In Union’s annual risk management survey, only 11% of respondents – compared with 16% in 2012 – said they would be unlikely to improve returns with fewer internal or external restrictions.

Approximately 70% of respondents said such restrictions, including regulations, were hindering them, while half said they could outperform their current performance by 100-500bps.

This year, Union surveyed 104 German institutional investors, 18% being Pensionskassen or Versorgungswerke, 26% insurers, 13% foundations and 25% banks. The remainder were largely companies and churches.

In his welcome speech for his company’s eighth annual risk management conference, Alexander Schindler, board member at Union, said: “We have lived in an age of regulation since 2008, which has killed some return opportunities.”

Just over half of the delegates at the conference, when asked in a TED survey, think the 12 months ahead will provide more opportunities than risks.

Roughly 5% of respondents classified themselves as “speculative/opportunity orientated” – a box no investor ticked in the 2012 survey.

The share of institutions saying they remained “absolutely safety orientated” dropped from 37% to 30%.

Thorsten Neumann, managing director at Union, claimed that regulations were “significantly limiting the room for manoeuvring for institutional investors”.

All in all, institutions are more pessimistic regarding their own financial situation than in 2012, with none of the respondents believing their situation would “significantly improve” over the next year.

In last year’s survey, 7% of respondents ticked this box.

In another TED survey at the conference in Mainz, two-thirds of delegates said they did not believe in a recovery of returns after a major interest rate change – which is not expected any time soon.

This fear was also mirrored in the Union survey, where many more respondents than in last year’s survey feared they would not generate a minimum return.

Union predicted a change in institutional investors’ asset allocation approach, with more looking into scenario-based allocation methods.

Both in the survey done together with University Siegen and another TED survey at the conference, almost half of all respondents said this approach would become “very important” or “important” in the near future.

Currently, the vast majority of German investors use a return/risk-optimised approach to asset allocation.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2436

    Asset class: Real Estate - Core Open-ended Real Estate Equity Fund (non-listed).
    Asset region: Asia Pacific.
    Size: Approx. CHF 70-100m per investment.
    Closing date: 2018-05-25.

  • QN-2438

    Asset class: High Yield Bonds.
    Asset region: US.
    Size: USD 300 million.
    Closing date: 2018-05-25.

  • RE-2441

    Closing date: 2018-05-31.

Begin Your Search Here