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Seven year high for Germany’s Spezialfonds

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GERMANY - Inflows to German institutional funds (Spezialfonds) totalled €48.3bn last year - the most since 1999, according to German fund industry association, BVI.

The inflows, along with market gains, meant that Spezialfonds' volume totalled €669bn at the end of 2006, the BVI said.

The strong performance of Spezialfonds during 2006 contrasted with that of German mutual funds. The latter had just €11.3bn in net inflows owing to €5.6bn in outflows from equity funds and €7.4bn in outflows from open-ended real estate funds.

Nonetheless, the BVI said that at the end of 2006, Germany's fund industry managed a new record of €1.24bn in assets. The total figure includes the Spezialfonds volume, a mutual fund volume of €571bn and €158bn worth of advisory mandates.

Meanwhile, at a BVI news conference in Frankfurt today, newly-elected president Wolfgang Mansfeld  approved government plans to introduce a capital gains tax on funds and securities from 2009.

Mansfeld said the BVI welcomed the tax in principle as it would simplify fiscal issues related to holding these investments.

On the other hand, Mansfeld said the plans should be refined so as not to harm those who either employ funds for long-term saving or those who plan to.

The BVI's suggestions for refining the plans include setting the capital gains tax at 20% rather than the government aim of 25%; and waving the tax if a saver holds on to the fund for at least 12 years or if the saver begins to withdraw from the fund after 60.

The BVI also prefers that the tax not apply to funds bought before its planned introduction in January 2009.

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