GERMANY - Citing strong demand for the management of German pension assets, UBS Global Asset Management says it has posted a “double-digit” rise in total assets under management in Germany this year.

The comments came in an interview with Tim Blackwell, managing director of UBS Global Asset Management in Germany. He declined to be more specific.

At the end of 2003, UBS in Germany managed five billion euros in assets, two-thirds of which were institutional and one-third of which was retail. Double-digit growth of that figure this year means that UBS in Germany currently manages at least 5.5 billion euros, 3.6 billion of which is for institutional clients. Put another way, AUM is up at least 500 million euros.

The figures would put UBS about even with rival Crédit Suisse Asset Management in Germany. CSAM currently manages 4.2 billion euros in German institutional assets.

According to Blackwell, the “biggest dynamic” for the growth this year was strong demand among German companies and pension funds for UBS’ management of their assets.

Referring to the government’s 2002 pension reform, Blackwell said: “While it may be true that the Riester-Rente has not created a boom for the asset_management industry, a large-scale restructuring of pension money is taking place right now.

“This is the main impetus for our growth in Germany,” he told IPE from his Frankfurt office.

Blackwell also disagreed with the complaint expressed by other foreign players that German companies tended to stick to their traditional house bank when it came to managing their assets.

“We’re not seeing this at all. On the contrary, there is a great need for us when it comes to providing off-balance sheet pensions solutions like CTAs (contractural trust agreements) for German companies,” he said.

Under a CTA, pension liabilities are removed from a company’s balance sheet and then consolidated into a fund backed up by cash. Like UBS, CSAM in Germany views CTAs as a key driver of growth in the German occupational pensions industry.

Blackwell also said UBS would unveil its first German-domiciled hedge fund in the first quarter of 2005. The product, actually a fund of hedge funds (Dachhedgefonds), aims to guarantee a return of between 6-8%.

Regarding hedge fund demand in Germany, the UBS managing director was fairly optimistic. “Hedge funds will become an important asset class for German institutional investors. We’re already seeing willingness among many to invest up to 3% of their holdings in hedge funds, and others are even willing to go farther,” he said.

Unlike CSAM, UBS has no immediate plans to create a German-domiciled real estate fund for institutional investors – a product which has been growing in importance for them. Blackwell said that instead, UBS was actively offering pan-european real estate funds based in Luxembourg to these investors. "We believe there is continuing demand for real estate solutions as part of the overall asset allocation," he said.

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