German institutional investors to double equity allocations
GERMANY - German institutional investors are aiming to increase their equity exposure by 6.8 percentage points in the first half of next year, nearly doubling the current allocation, according to a survey by SEB Asset Management.
This summer, the average equity allocation in the portfolios of the 458 institutional investors surveyed stood at approximately 7%.
At the same time, survey respondents said they intended to decrease their overall bond exposure - currently around 76% - by 4.1 percentage points. SEB said mainly Pensionskassen and other pension vehicles would take this step.
However, the allocation for emerging market bonds - currently just less than 3% - is set to increase by 1.1 percentage points.
SEB polled institutions with an average asset size of €1.8bn, ranging from small institutions with less than €100m in assets under management and large ones with more than €3bn.
More than two-thirds of that money is managed in-house, the rest having been awarded to three managers on average, with Pensionskassen and Versorgungswerke being among those institutions with the largest number of external mandates.
Almost 40% of respondents said they preferred all-in fees, and the same number named performance fees as their preferred model. Minimum fees (4.6%) and variable bonuses (8.7%) were the least preferred fee structures.
The survey also asked whether institutions were using consultants, and 25% of all surveyed Versorgungswerke said they did - in total, the average is only 10%, corroborating the low rate of consultancy use found in other surveys.
Approximately 13% of Pensionskassen and 12.5% of insurers currently use consultants, while none of the surveyed banks or churches do, SEB said.