GERMANY - Union Investment, the asset manager for German co-operative banks, has reported substantial growth in third-party business, noting that of the 76 mandates won during 2006, 58 came from institutions outside the co-operative bank sector.
Of the 58 non-co-operative bank mandates, 10 were from pension funds.
Union also said its complete institutional business, including German institutional funds (Spezialfonds), had €5.5bn in inflows last year, adding that one-third of the inflows were from new investors.
The inflows helped lift Union's institutional assets under management to €63.9bn at the end of 2006 from €56.4bn a year earlier.
Rüdiger Ginsberg, Union's chief executive, said the growth in the firm's third-party business was being driven in part by its competence as a risk manager.
"Efficient risk management is becoming increasingly important for institutional investors in this country," he told a press conference in Frankfurt yesterday. "As a result, we will continue to expand this competence but also focus on optimising the risk/return balance on the assets entrusted to us through further diversification."
Union is a provider of absolute return funds targeted at institutional investors. Labelled IMMUNO, the funds took in €3.7bn last year, bringing their total assets to €21.1bn.
Growth in its third-party business also prompted Union to reaffirm that by 2010, one-half of its institutional assets would come from outside Germany's co-operative bank sector.
"Considering that one-third of our institutional business is currently from outside the sector, we should have no problem reaching that target," said Alexander Schindler, Union board member in charge of institutional business.
Turning to pensions, Union said that with 1m contracts sold, it was by far Germany's leading provider of fund-based versions of the ‘Riester-Rente' - a government-subsidised private pension.
The second-leading provider of fund-based Riester pensions is Deutsche Bank's retail arm DWS, which, at last count, had sold 50,000 contracts. Last September, DWS created a new sales team to challenge Union's predominance in this area.
Separately, US asset manager Legg Mason said it had opened an office in Frankfurt for distribution of mutual funds in the German market. The office is headed by Gerhard Kroll.
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