AUSTRIA - Over the last year 2007 Pioneer Investments Austria (PIA) saw outflows of €600m in its institutional business.
As long-term bond products continued to disappoint, institutional investors pulled money from cash funds to invest in short-term futures and options in the bond sector, "which is understandable", PIA chief executive Helmut Sobotka explained at a press conference in Vienna today.
"It was a very difficult year," he said at the opening of the meeting.
"For the first time in decades the cumulated assets in investment funds offered in Austria was declining."
PIA, with total assets under management of €24.9bn - down from €26bn at end-2006 half of which are from institutional clients, saw its institutional assets shrink from €13.5bn to €12.9bn over the last year.
The year before and still in the first half of 2007 institutional investors were pouring into cash funds, increasing PIA's assets under management in this client sector by more than €2bn since the end of 2005.
Sobotka expects institutional investors to return to cash funds once the situation in the bond sector has become more stable again and the EURIBOR has come down a bit.
"But that will take a few months," Sobotka added.
Despite the outflows PIA - rebranded from Capital Invest after the takeover of its mother company BA-CA by the Italian UniCredit Group - could hold its third place in the Austrian asset management market.
It ranks behind Raiffeisen (23.19%) and Erste Sparinvest (18.47%) with a market share of 15.23%. But looking at the institutional market alone, Pioneer is slightly larger than Erste with Raiffeisen still in the lead.
Pioneer expects an economic slowdown in 2008 but no recession or stagnation, commented Johann Kernbauer, PIA chief investment officer.
He explained a recession, as predicted for instance by Goldman Sachs, was unlikely as the weak dollar was helping US exports.
"A recession is only likely should the price decline on the real estate markets be more pronounced, in case we saw a broadening of the credit crisis or should the energy, food and commodity prices increase at the same speed as last year," Kernbauer explained.
According to PIA, the emerging markets sector will be least affected by the economic slowdown.
"Even in the case of a massive decline in US-imports from China, the Asian economies will continue to grow," Kernbauer noted.
He added the driving forces in those markets were private institutions and increasingly consumers.
There was still a lot of potential in emerging markets as 87% of the world's population are living in those regions and these countries own 68% of the world's monetary reserves but they make up only 11% of the world's market capitalisation, the Pioneer CIO added.
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