Pension schemes bump insurers down as top investors in German Spezialfonds

Pension schemes have outstripped insurance companies as the largest investor group in German Spezialfonds for the first time.

According to Kommalpha’s quarterly report, Spezialfonds managed pension scheme assets totalling €530.4bn at the end of December last year, equivalent to a market share of almost 28%.

Assets of insurance companies managed by Spezialfonds totalled close to €526bn at the end of December, resulting in almost the same market share as of pension funds.

Pension schemes allocated around €16.9bn in Spezialfonds in the fourth quarter of 2022, compared with €16.7bn by insurance companies.

The analysis of cash inflows of shareholders in Spezialfonds shows that pension funds have pulled €33bn from Spezialfonds in the last part of the year, after injecting €50bn.

Spezialfonds recorded recorded inflows of €16.7bn from insurance companies in the last quarter of the year, meaning a cash injection of €22.4bn on net outflows of €5.7bn, according to Kommalpha.

The allocations of insurance companies in Spezialfonds decreased significantly last year, compared with the investments of pension schemes, as a result of interest rate hikes, Kommalpha explained, with insurers heavily investing in bonds undergoing corrections as interest rates increased.

“Long durations accelerate the negative valuation effects for insurance companies, [while] pension schemes are less impacted by increasing interest rates as they hold a lower amount of bonds in portfolios and a higher share of, for example, alternative investments, or real estate,” said Clemens Schuerhoff, managing director of Kommalpha.

In the fourth quarter of last year, open-ended real estate special funds collected almost €4.2bn from institutional investors, and bond funds €2.3bn, recovering from Q3.

Institutional investors, instead, withdrew €6.2bn from equity, and €4.6bn from funds of funds, while investing €16.5bn net in mixed Spezialfonds mandates in the fourth quarter, the quarterly report showed.

The largest amount of cash, almost €70bn, was allocated to mixed securities funds in the fourth quarter of 2022.

Overall, cash injected by pension institutions in Spezialfonds peaked to almost €34bn in October last year, after an earlier spike of almost €20bn in August.

Pension institutions have increased the amount of cash injected in Spezialfonds year-on-year to €27.5bn in 2022, followed by insurance companies pumping in around €15bn cash.

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