GERMANY - Institutional fund provider WestAM expects to raise its assets under management to €40bn at the end of 2007 from just under €27bn currently, its chief executive says.
Speaking at a news conference in Frankfurt, Kevin Birch said the expected growth in assets would be roughly shared between the Sparkassen, or state-owned savings banks, and other institutional clients.
The outfit is a unit of WestLB, Germany’s biggest state-owned Landesbank. Around €10bn of WestAM’s total assets under management comes from Sparkassen, which are part shareholders of WestLB.
The remaining €16.9bn in assets comes from other institutional clients, including other insurers, other banks, pension funds and foundations. Pension funds account for €2.9bn of that total.
“We also expect that by the end of this year, we will hit the €30bn mark. That might not sound all that dramatic, but it’s a sign of steady growth,” Birch told journalists.
Above all, WestAM specialises in European bonds, which make up €12.1bn of its portfolio. It invests another €5.2bn in European mixed stock and bond funds.
Birch also said that partly due to increased investment in mutual funds on the part of German institutional clients, WestAM aimed to ramp up that part of its business.
Citing a study from French investment bank Lazard, Christoph Dahm, Birch’s colleague who is head of institutional sales, noted that by the end of 2007, mutual funds would make up €50bn of the German institutional market – or double the current figure.
Dahm said the investors’ increasing appetite for mutual funds was being driven by the International Financial Reporting Standards.
Under IFRS, German investors with more than 20% of their assets in institutional funds (Spezialfonds) must report every single investment made by those funds. These investors worry that the requirement could increase their costs.
As a result, active investors in Spezialfonds – who account for virtually all of the German institutional market – are increasingly looking at mutual funds as an alternative.
Birch, Dahn and Uwe Fuiten, head of investment management, were appointed to WestAM’s board as part of a reshuffle last January.