GERMANY - Union Investment, the asset manager for Germany's co-operative bank sector, is rolling out sustainability and portable alpha funds on the back of institutional investor demand.
Union expects one-half of its institutional inflows will come from outside the co-operative bank sector by 2010 so two new funds are being offered to support that growth.
Speaking at a press conference this weekend, Union chief executive Rüdiger Ginsberg reported there was a significant jump in year-on-year institutional inflows of €4bn in the first half, compared with €1.5bn in the same 2006 period, lifting total institutional assets under management to just under €75bn.
Union's portable alpha fund will be launched in October and the asset manager is seeking to maximise the alpha return by investing in securities not correlated with the beta, or market return, of the existing portfolio.
Union's sustainability fund was launched earlier this month, and invests predominantly in bonds but up to 30% of the fund can be in European equities selected according to socially-responsible investment (SRI) criteria.
Alexander Schindler, Union board member responsible for institutional business, said he expected the projected volume for each fund to reach €200m by 2009.
Union's institutional assets currently include €44bn in Spezialfonds (German institutional funds), €11.2bn in mutual funds and €12.1bn with UnionPanAgora, its quantitative venture with Boston-based manager PanAgora.
"Around one-third of our institutional inflows come from investors that are not co-operative banks. Our aim is to continue to expand that client base," said Ginsberg.
Union Investment is currently Germany's largest provider of fund-based "Riester-Renten"- government-subsidised private pensions for salaried employees - with 1.2m contracts sold and has just launched a fund-based version of the "Rürup-Rente", a subsidised pension targeted at the self-employed.
According to Hans Joachim Reinke, board member in charge of private clients, Union expects to sell 6,000 of the Rürup pensions this year, rising to 25,000 in 2008.