Capital inflows to Spezialfonds, a vehicle open only to professional investors in Germany, stagnated in 2024 as German institutional investors shifted to direct investments in fixed income.
Inflows to Spezialfonds amounted to €33.6bn last year, compared with €33.7bn in 2023, while investors looked for opportunities with rising interest rates, according to the annual report on the German fund market published today by the country’s Investment Funds Association (BVI).
Institutional investors have increased direct investments in corporate bonds with good credit ratings and government bonds in recent years, BVI said.
Spezialfonds also failed to record higher inflows year-on-year in 2024 from retirement benefit schemes whose capital requirements increased due to higher payout obligations, it added.
Open-ended Spezialfonds held the largest amount of assets in Germany amounting to €2.18trn, out of a total of €4.47trn managed by the country’s fund industry, BVI’s figures show.
Retirement benefit schemes are the largest investors in Spezialfonds, with allocations amounting to €774bn in 2024, followed by insurers with €526bn, it added.
Both investor groups account for just under 60% of the total assets held in Spezialfonds, according to the figures.
Spezialfonds investing in securities and private equity funds held net assets worth €2.01trn at the end of last year, while real assets Spezialifonds €166.29m, according to BVI.
Universal Investment had a 24% market share in terms of net open-end Spezialfonds assets, followed by HSBC Trinkaus & Burkhardt Gruppe with 21.3%, and by Allianz Asset Management Group with 12.3%, according to BVI’s figures.
Matthias Liermann, BVI’s president, said that geopolitical tensions, equity market returns and interest rate cuts shaped 2024 for the fund industry.
“Given this situation, the [German fund] industry recorded a respectable new business with €60bn in funds and mandates, and reached record assets of some €4,50trn,” he added.
BVI expects the next government to cut red tape to make way for more investments in the domestic economy.
The draft for a second Financing for the Future Act (Zukunftsfinanzierungsgesetz), which was not approved after the collapse of Germany’s ‘traffic light’ government, would have finally paved the way for long-term investments, especially in German infrastructure, BVI said.
“Germany has an immense backlog of reforms to the detriment of savers, infrastructure, and the competitiveness of the financial centre,” Thomas Richter, chief executive officer of BVI, said.
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