GERMANY - German ratings agency Feri has found some German institutional investors have replaced their asset managers in the wake of the recent financial turbulence.

In its latest biannual survey on investment management, 28% of the 128 institutional investors interviewed - who between them have combined assets under management of €750bn - said they had changed their asset managers following the financial and economic crisis.

The post-crisis measure mentioned most often by interviewees was a review of their internal risk management (57%), followed by an increase in the firm's bond exposure (47%)  while manager reviews was listed as the third route many investors took.

"Many asset managers have failed in the eyes of the institutional investors," argued Feri.

Tobias Schmidt, chief executive of Feri EuroRating Services, also claimed investors are turning to specialist investment managers - a move which may give domestic specialised boutiques a boost.

"A lot of institutional investors are currently seeing the advantage of smaller, specialised firms which are better able to cater to individual needs."

That said, another trend spotted by Feri is a continuation in the growth of demand for master KAGs; all-in-one structures that not only offer asset management but also deliver administrative services.

"Among the large, established KAGs, some continue to have the investors' trust because of their size and market strength," explained Feri.

Some asset management houses, "including many foreign companies", have been punished by institutions while others are still seeing inflows.

The firm added that the investment behaviour of the investors had also changed.

Compared to the assets flows managed in 2007, the equity quota of many investors has dropped 5.5 percentage points to 5.9% of their total assets.

Fixed-income investments remain the dominant asset at 79.9% of assets, compared with 67.7% in 2007.

That said, Feri predicted there will be 10.9% growth for equity funds by 2012 and an even higher increase in weightings for hedge funds and private equity vehicles, as take-up on existing assets is expected to rise by an estimated 20.6% in total.

Externally-managed bond fund holdings are only expected to increase by 0.2%, the firm argued, "as many investors intend to manage their bond holdings themselves in future".