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Structured products regain trust with German pension funds

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  • Structured products regain trust with German pension funds

GERMANY - Retirement funds in Germany are showing increased interest in structured products, hedge funds and infrastructure as well as LDI and SRI, a recent survey by IPE Institutional Investment reveals.

One fifth of the 42 pension funds that took part in the 2010 online survey Requirements of German Institutional Investors said they were looking at structured products while the year before only 7% (out of 34) said they were considering such investments.

Interest in hedge funds has tripled which means that now almost half of all pension funds are looking into this asset class and 19% are already invested compared to 9% in 2008.

Over 50% noted they will look into LDI structures and a similar number said they will consider SRI investments.

What seems to have suffered are private equity investments - where only 7% say they are looking into it compared to 21% a year earlier - and portable alpha products where the number of funds actually invested decreased from 18% to just 7%.

The use of quantitative approaches has become much more widespread with 74% of all participating funds having implemented such strategies compared to 44% the year before.

In total some 120 institutional investors with combined assets under management of €500bn took part in the survey by IPE-Institutional Investment, the German operation of IPE.

For 2010 more than 70% of all those surveyed expect inflation to increase in Europe and 95% think inflation will go up in emerging markets this year.

Among the pension funds 40% are already invested in inflation-linkers and 38% are considering a similar move.

Asset manager selection remains the field consultant advice is most sought in, but the number of investors using external experts for asset allocation has increased from 13% to 31% and there is also some evidence for a slight increase in consultancy use for risk management.

Asked with which asset manager they were most satisfied, the majority of investors named Union Investment, well known for its risk management approach.

Helaba Investment and Universal Investment share the second place while Hines, IVG and SEB Invest received the most negative mentions.

A copy of the complete study can be obtained from www.institutional-investment.de. In case of questions please contact Frank Schnattinger, editor in chief of IPE Institutional Investment (f.schnattinger@institutional-investment.de).

 

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