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German institutions dissatisfied - study

GERMANY - A majority of small German institutional investors are dissatisfied with their investments, complaining that they are neither diversified enough nor managed by world-class professionals, a new study has found.

In the study, from SEI Investments, 73 small- to midsize enterprises in Germany were asked how they felt about their investments. According to the study, 64% of these SMEs replied that their investments lacked a high-level of diversification either in the German market or beyond.

Another 53% complained that as they only had small sums of money to invest, they could not gain access to the “world’s best asset managers”.

Access to those managers is largely reserved for German institutional clients which use Spezialfonds, or the traditional institutional fund. Yet because the investment threshold for a Spezialfonds is typically 50 million euros, smaller clients usually are barred from it.

SEI’s study also showed that 70% of the SMEs felt that Dachfonds, a fund-of-funds used widely by German institutional investors, did not live up to their promise of wide diversification. Only 28%, on the other hand, were familiar with multi-manager funds, which SEI says is a better alternative to Dachfonds.

The study seems to support SEI’s view that there is huge market potential for multi-manager funds in Germany. Since the beginning of January, Germany’s Cominvest has been offering SEI’s multi-manager funds to primarily SME clients, and net inflows to the funds so far total 150 million euros.

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