GERMANY - Frankfurt-based Union Investment saw net inflows of €3.8bn in the first half of 2009.

Of this, €2.4bn were invested by institutional investors in Spezialfonds, the investment vehicle favoured by German institutions.

Most interest was generated by corporate fixed-maturity funds into which institutions invested €900m.

Assets under management increased from €144bn at year-end 2008 to €151bn.

“The great challenge in institutional business is currently the sharply reduced risk budgets, which considerably constrain investors’ scope,” commented Union CEO Rüdiger Ginsberg.

These constraints together with tighter regulations regarding risky assets put in place in many countries in the wake of the financial crisis are preventing institutions from investing as much as they would like to in asset classes offering opportunities, he said.

Union, which has the second largest market share in the institutional business in Germany, noted risk management was one of the most important features managers currently have to offer investors.

Ginsberg explained that the crisis has changed the capital markets but not overthrown all old rules completely.

He sees markets now showing a more flat but pronounced basic trend with shorter cycles, which favoured active management.