Union sees surge of interest from German institutionals

GERMANY – Institutional investors accounted for nearly two-thirds of new inflows for German asset manager Union Investment in the first half of 2013.

The asset manager saw assets under management increase by 9.4% year on year to nearly €198bn, as at the end of June.

New net inflows in the first half amounted to €6.7bn, with more than €4bn coming from institutional investors.

Union said it won 22 new institutional clients in the first half of 2013, with 20 of those coming from “outside the cooperative sector”.

The Volks- and Raiffeisenbanken network, consisting of cooperatively organised banks, is a shareholder in Union.

The asset manager noted increasing institutional demand for covered bonds, emerging market corporate bonds and equity investments with dividend strategies.

It also cited growing interest in infrastructure and real estate investments over the period.

A Union spokesman recently told IPE the company aimed to meet this demand not only with Spezialfonds but open-ended funds for institutional investors, despite the new stricter regulations.

The asset manager cited “recent studies”, according to which “half of European insurers and pension funds have not achieved their target returns” due to the low returns from traditional bond portfolios.

Hans Joachim Reinke, chief executive at Union Asset Management, said: “Target returns of 4% per year are no longer feasible with the old approaches to investment.”