MONACO - German investors have moved huge volumes of assets into the derivatives and certificates area, says Martin Theisinger, managing director for Germany and Austria at Schroders Investment Management.

He told the annual Fund Forum conference in Monaco: “There was a total overall volume of €60bn in these packaged products in 2004.” Up to April this year some €30bn had flowed into these products, he said. The figures are according to estimates by the Derivatives Forum, a market association.

Theisinger saw this as a threat to the mutual fund groups by the investment banks. While the products provide a “decent return” and less risk to retail investors, “the Germans go for them”. But he warned that the packages are often lack transparency.

Product providers needed to be transparent in what they offered to clients. “Certificates and absolute return structures should be true to label and deliver what they promise.”

He went on to say these products have been sold on the basis of a “rather risk-free return”.

“But people have not looked into the underlying costs structures nor at the risks these certificates have.”

He added that an attempt had been made to start a discussion but this had been blocked but the trade association and interested parties in Germany.

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