Almost half of German institutional investors are expected to miss the investment return target set at the start of the year, once again owing to the low interest rate environment.
Research conducted by German asset manager Union Investment showed banks were the most pessimistic while 49% of asset managers expected to miss targets.
As a result, 43.5% of 109 investors surveyed expect to miss their 2014 target, a sentiment extrapolated over the medium term to 2018.
In reaction to the burgeoning negativity among German institutional investors, Union said it had observed a growing focus on investment returns at the expense of safety and liquidity.
Union said while safety and risk-management still remained key overall, only 64% said it was the most important consideration, down from 79% the previous year.
“The proportion of those describing their investment policies as safety-driven was as high as 84% last year, this figure fell to 77% in the latest survey,” the report said.
Investment returns were now most important for 19% of investors compared to 8% in last year’s report.
However, despite a growing focus on investment return, loss-avoidance still remained the key objective for 80% of investors.
In line with this, risk management was seen as the most important criteria when selecting an asset management by 82% of respondents.
Alexander Schindler, member of Union’s investment board, said the sentiment showed the expectation of a long-term low-rate environment among institutions.
“The stronger pressure on returns has inevitably increased the willingness to take carefully calculated risks,” he said.
“Given the pressure on returns, investors are now more concerned than ever to achieve superior risk-controlled performance.
“Sound risk management therefore always involves managing opportunities as well.”
1 Reader's comment