German pension funds focus on liquidity, poll says

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  • German pension funds focus on liquidity, poll says

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GERMANY - Among German institutional investors, pension funds are the least concerned about security when making investment decisions, according to a poll commissioned by alternatives manager Aquila Capital.

In total, more than 60% of the 169 institutional investors surveyed said security was paramount when it came to their investments.

Of the 17 pension funds polled, however, not even half (47.1%) ranked security as the top criterion.

Roughly 30% named liquidity as their main focus - compared with 20% for the overall sample - while another 23% said return was the top priority.

In terms of risk profile, 65% of pension funds categorised themselves as trending slightly toward safety, with an average mark of 2.1 on a scale of 1-5, with 5 being the most speculative.

According to Aquila, that made pension funds the third most "speculative" among German institutional investors, with insurances, foundations and credit institutions marking an average 1.8. 

The poll also found the average exposure of pension funds to alternative assets, at 13.5%, was above the average for German institutional investors (12.1%).

By far, the most preferred alternative investment among all institutional investors was real estate (47.9%), followed by commodities (27.7%), absolute return funds (26.9%), asset-backed securities (23.5%) and private equity (19.3%).

More than 80% of respondents said risk was a possible risk with alternatives, while approximately 60% named transparency, expertise and liquidity as potential problems.
Only 36% said the costs were too high, while 24% said alternatives had a negative image.

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