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Germany’s Deka in E1.9bn outflow

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GERMANY - Deka Bank, Germany’s third-largest provider of institutional funds, or Spezialfonds, has admitted that outflows from its Spezialfonds totalled 1.9 billion euros in the first nine months of 2004.

Deka said half of the outflows were due to the creation of a “master fund” solution, adding that it no longer officially in charge of those assets, it was still overseeing their investment. The other 800 million euros were pure net outflows.

As a result, Deka said its institutional assets under management at the end of September declined to 45.2 billion euros from 46 billion one year earlier.

By comparison, Germany’s Spezialfonds industry as a whole recorded net inflows of 13.3 billion euros between January and September, according to the German fund industry association BVI.

The significant loss of institutional money is just another in a series of recent setbacks at Deka. In October, a Deka mutual fund investing in German real estate narrowly averted a liquidity crisis after suffering no less than 1.2 billion in net outflows.

Then in October, Deka fired three senior executives in charge of its real estate fund arm, amid claims they had lied about the value of its investments in German real estate. Another real estate fund executive was let go in late August for allegedly accepting a bribe.

Deka said its real estate funds as a whole lost another 646 million euros last month, but that net outflows had declined since then. It added that new management of the real estate arm as well as further transparency about this type of fund would help to restore investor confidence in the product.

Deka also said it held on to its number two ranking in German mutual funds from January to September. As of 30 September, Deka’s retail AUM was 90.7 billion euros, up from 85.2 billion one year earlier.

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