GERMANY - Demand for multi-manager funds in Germany remains sluggish, partly because institutions want to influence the way their assets are invested, says Universal-Investment.
“The fact is that up until now demand for multi-manager funds has been sluggish. My feeling is that this is partly because the investors still want to have great say over the asset management,” said Bernd Wagner, chief executive at the German fund administrator.
Universal’s own multi-manager fund, launched last April after a prolonged delay, has taken in a mere €100m in assets. Consultant for the fund is FERI, a leading German house, and its marketing arm is Multi-Manager Fonds Consulting.
Wagner added that the issue of control was a hindrance to institutional demand for investment funds in Germany generally.
“The demand potential for investment funds is undoubtedly there, but until we settle this control issue, it won’t be realised,” he told journalists at a news conference in Frankfurt.
Multi-manager funds were launched in Germany in 2003 as an alternative to Spezialfonds, or traditional German institutional funds. Spezialfonds are preferred by German institutions, partly because they have great say in how they are constructed and managed.
Such power, however, carries a price. Spezialfonds typically require a base investment of at least €25m.
On the other hand, German providers of multi-manager funds argue that their products have many of the same benefits as Spezialfonds – notably great diversification – for investment sums as little as €100,000.
The providers add that the funds also are ideal for frequent Spezialfonds investors, as the products spare them the cost and hassle of complying with the new International Financial Reporting Standard.
Yet along with Universal, all other multi-manager providers in Germany have had tepid inflows to their products. The three-year-old venture between German private bank Metzler and Russell has taken in €200m, while a two-year-old one between Russell’s archrival SEI and Commerzbank has accumulated just €150m.
Deutsche Asset Management also recently admitted that its multi-manager venture with German consultant RMC would take in far less in assets that it had originally expected. The venture has launched a global equity fund with just €60m in seed money.