Pension schemes have outstripped insurance companies as the largest investor group in German Spezialfonds for the first time.
According to Kommalpha’s quarterly report, Spezialfonds managed pension scheme assets totalling €530.4bn at the end of December last year, equivalent to a market share of almost 28%.
Assets of insurance companies managed by Spezialfonds totalled close to €526bn at the end of December, resulting in almost the same market share as of pension funds.
Pension schemes allocated around €16.9bn in Spezialfonds in the fourth quarter of 2022, compared with €16.7bn by insurance companies.
The analysis of cash inflows of shareholders in Spezialfonds shows that pension funds have pulled €33bn from Spezialfonds in the last part of the year, after injecting €50bn.
Spezialfonds recorded recorded inflows of €16.7bn from insurance companies in the last quarter of the year, meaning a cash injection of €22.4bn on net outflows of €5.7bn, according to Kommalpha.
The allocations of insurance companies in Spezialfonds decreased significantly last year, compared with the investments of pension schemes, as a result of interest rate hikes, Kommalpha explained, with insurers heavily investing in bonds undergoing corrections as interest rates increased.
“Long durations accelerate the negative valuation effects for insurance companies, [while] pension schemes are less impacted by increasing interest rates as they hold a lower amount of bonds in portfolios and a higher share of, for example, alternative investments, or real estate,” said Clemens Schuerhoff, managing director of Kommalpha.
In the fourth quarter of last year, open-ended real estate special funds collected almost €4.2bn from institutional investors, and bond funds €2.3bn, recovering from Q3.
Institutional investors, instead, withdrew €6.2bn from equity, and €4.6bn from funds of funds, while investing €16.5bn net in mixed Spezialfonds mandates in the fourth quarter, the quarterly report showed.
The largest amount of cash, almost €70bn, was allocated to mixed securities funds in the fourth quarter of 2022.
Overall, cash injected by pension institutions in Spezialfonds peaked to almost €34bn in October last year, after an earlier spike of almost €20bn in August.
Pension institutions have increased the amount of cash injected in Spezialfonds year-on-year to €27.5bn in 2022, followed by insurance companies pumping in around €15bn cash.
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