Mutual funds to see surge in German institutional interest
GERMANY - Interest in mutual funds (publikumsfonds) is "high" and "set to grow" among German institutional investors, according to a poll of fund managers and investors.
German consultancy Kommalpha surveyed 60 institutional investors and providers of mutual funds and found 55% believed interest was already "high" while another 73% noted interest will grow fruther.
"For investments under €50m, publikumsfonds offer a real, efficient alternative to spezialfonds (bespoke funds created to cover regulatory needs for institutional investors)", explained Nadia Garcia, consultant at Kommalpha.
Mandates for special investment focuses such as US small-caps or global high-yield are often too small to allow institutional investors to buy into a spezialfonds, suggested Christian Rumpf, senior institutional director at Franklin Templeton, which co-authored the study.
Around 20% of the polled institutions said they had between 10% and 20% of their portfolio invested in mutual funds. And further 10% said among their investments the share was as high as 50%.
Regulations on publikumsfonds were eased when investment law was reformed in Germany 2007, to allow more asset classes and investment strategies to be included, though the regime still ensured a solid legal framework.
"Now - during the crisis - we see significant reservation vis-à-vis foreign legal frameworks (no matter whether nearshore or offshore)," claimed Garcia.
Kommalpha argued that mutual funds offered investors certainties with regards to accounting, efficiency and liquidity.
But a further trend which is driving interest in publikumsfonds is the restructuring of portfolios towards core-satellite strategies, within which ETFs - which are counted among mutual funds - are featuring prominently.
In its survey, Kommalpha also collected statistical data on the mutual funds offered in the market as the consultancy noted there "is a lack of transparency" when it comes to information on publikumsfonds.
Only 7% of the mutual funds are offered solely to institutional investors, leaving most funds open to all investors.
Both the poll among investors and providers as well as the statistics confirmed equities were the most popular asset class in which publikumsfonds were used.
Data also showed that most mutual funds had assets under management of between €10m and €50m.
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