German asset manager DWS saw outflows from active funds in the third quarter while passive flows were “close to flat”.
A few institutional investors took money out of active equity funds while demand from retail was lower due to volatile markets, the firm said.
Despite this, DWS assets under management increased by €5 billion in the quarter to reach €692 billion due to positive market performance and currencies.
DWS’s European-listed exchange-traded funds saw strong inflows, but the passive business was impacted by an institutional client that redeemed money due to US tax reforms.
Higher demand for real estate pushed up flows into alternatives, with the firm’s “grundbesitz” open-end real estate funds reaching combined assets of more than €10 billion for the first time.
Overall, the firm saw net outflows of €2.7 billion, a continuation of outflows from the second quarter, though lower than the previous €4.9 billion.
A cost-reduction programme saw costs decrease 7% to €398 million and an 18% increase in profit before tax to €177 million.
Nicolas Moreau, chief executive officer, said: “Through effective cost management and stable revenues we have been able to show a good increase in profitability.”
The firm has introduced a five-year transformation plan and announced a deal to work with other firms, including Italian insurance company Generali Group. The two firms will strengthen their relationships in certain European markets where Generali offers unit-linked products.
The deal sees DWS become one of the preferred asset managers for Generali after a selection process and is the first manager to enter into an agreement like this with Generali’s asset, wealth and investment management business.
The first countries in focus in the joint push are France, Switzerland, Italy and Germany. Other countries may be added.
“Expanding our relationship with one of the biggest insurance companies in the world is an important milestone for us as we further develop our already sizeable insurance business, especially in the unit-linked space,” said Thorsten Michalik, co-head of DWS Group global coverage.
Bruno Guiot, head of group individual savings solutions at Assicurazioni Generali, said the partnership with DWS is a “crucial step” in reshaping unit-linked portfolios with selected high-quality providers.
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