Pension funds have made critical contributions into German Spezialfonds in the fourth quarter of last year that led to a “strong year-end spurt in cash flows”, according to an analysis conducted by Kommalpha.

High net funding from pension funds and insurance companies in Spezialfonds was the main driver of the positive performance especially in December 2020, it said.

Net inflows in Spezialfonds from pension funds in the fourth quarter of 2020 reached a total of €14.5bn, followed by contributions from insurance companies with €10.7bn and private non-profit organisations with €5.2bn.

Pension institutions contributed with total inflows of €23.6bn in Q4 last year, while insurance companies topped the ranking in terms of total inflows in Spezialfonds with €35.7bn, concentrated mainly in November and December.

Private non-profit organisations landed third place, according to the quarterly analysis, with €10bn in contributions, showing a “dynamic growth” in the last few years, Kommalpha said.

Overall, Spezialfonds showed resilience in the fourth quarter of last year with regards to net inflows and inflows in general. The net inflow totalled €43.3bn, and inflows of fresh money amounted to €96.1bn. December in particular stood out with net inflows of €28.6bn and inflows of €41.3bn.

Special funds of mixed securities collected a total of €22.2bn net in Q4 2020, with December again being the strongest month for inflows. Funds of funds saw €6.4bn, equity special funds got €5.2bn, and special funds for bonds had €3.1bn. These types of funds, however, recorded negative net inflows in November.

Securities assets in special funds amounted to a total of €1.75trn at the end of 2020, including €480.7bn (27%) allocated in securities issued in Germany, €165.8bn in France, €145.5bn in Luxembourg and €95.3bn in the Netherlands.

Spezialfonds invest only 4% – or €65bn – in securities issued in the UK. According to the analysis, €68.2bn (31%) of the portfolio of special funds is made up of German government bonds, €50.5bn (23%) of French government bonds and €22bn of Italian and Spanish government bonds.

Spezialfonds show a home-bias approach also for allocation in equities, with €41.8bn (36%) invested in German stocks, €29.6bn (26%) in French stocks, €14.9billion in Dutch equities and €5bn in Spanish and Italian stocks.

Special funds allocated €467bn in other investment funds in the euro-zone in 2020.

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