Solutions for changing client needs
In seeking returns, investors have to accept more and more risks. In order to manage these risks and to purposefully harness opportunities, consideration of sustainability criteria, the internationalisation of portfolios and alternative asset classes for investments are becoming increasingly important for investors.
Alexander Schindler, Member of the Executive Board
I spent the first week of January 2020 in Hong Kong on business. The front pages of the daily newspapers were dominated by Wuhan and the coronavirus outbreak there. Even so, I did not expect that this virus would affect all of our lives to such an extent. I could not foresee that Covid-19 would affect not only societies, but the entire global economy. The scale of the pandemic led to massive volatility on the capital markets.
In this phase of uncertainty, it became clear that we had accomplished our mission of increasing assets and earning trust over the past years. While it is true that investors from the real economy have liquidated some of their investments to secure liquidity, most clients have remained very calm. We have once again increased our customer support during this challenging period. This active support has paid dividends in many cases, resulting in an expansion of our business with institutional investors. We recorded net inflows of 6.3 billion euros, with assets under management increased to 212.1 billion euros.
Changes in institutional asset management
Nevertheless, we are also seeing an accelerated change in the requirements our institutional clients expect of us. Factors such as security and liquidity are gaining in importance, as they did in the years following the financial crisis.
At the same time, government fiscal stimulus measures have led to a further increase in the debt burden of Germany’s individual states. Interest rates will only move within a very small range for years to come. Investors are forced to take risks in order to hone in on opportunities and generate returns in this environment. In managing these risks, it is becoming increasingly important to take sustainability criteria into account. It is now common knowledge in the industry that taking sustainability criteria into account can help companies outperform the competition in the long term and has a clear positive impact on risk management.
Covid-19 is a driver of sustainable investment
In addition, the sustainable restructuring of the economy is gaining additional momentum against the backdrop of the Covid-19 pandemic. This can be seen, for example, in the fact that the Covid-19 stimulus programmes adopted or planned across Europe and at the national level have, in most cases, been allocated to building a more sustainable economy.
Investors, and we in our role as asset managers, have a special part to play here. This is because the economy cannot be sustainably restructured without the provision of private capital. As an active asset manager, we intend to go beyond selecting sustainable businesses for our investments and to target investments in businesses that have just embarked on the path to sustainability. We seek to support and promote the transformation of these businesses in order to share in their success for the benefit of our investors.
“As an active asset manager, we intend to go beyond selecting sustainable businesses for our investments and to target investments in businesses that have just embarked on the path to sustainability.“
Member of the Executive Board
Increasing importance of portfolio internationalisation and alternative asset classes
Currently, a disproportionately large number of institutional investors in Germany still invest in their own country and in the euro zone despite the growing need to internationalise portfolios. The European bond market offers less potential for returns than other regions. At the same time, the European stock market lags behind in digital technologies by international standards. Yet there is ever increasing demand in precisely these technologies. These are just two examples that illustrate the advantages of a gradual internationalisation of portfolios. And alternative asset classes are also becoming increasingly important for many investors in their search for returns.
Solutions tailored to clients’ needs
In recent years, we have systematically tailored our solutions to our clients’ demands mentioned above, enabling us to continuously expand our range of products and services and to improve their quality. This is illustrated by the increase in the number of clients and mandates – an increase which incidentally can also be seen in the alternative investments segment – as well as by the high levels of client satisfaction. A proof are the many independent awards.
We are continuing along this path in the interests of our clients. For we are convinced that active asset management can offer an opportunity to generate greater yield, especially in times of change.