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SFDR conversions and public demand drive surge in German sustainable funds

Germany1The volume of investment funds with “sustainability features” held by German investors grew by €130 billion in the fourth quarter of 2021.

BVI, the German funds industry's trade body, reported quarter-on-quarter growth and also found that retail funds managed €463 billion in sustainability funds at the end of 2021, which was equal to 31% of total retail fund assets.

Combined with the €125 billion managed by Spezialfonds, the total assets under management (AUM) in funds with sustainability features amounted to €588 billion, up 28% or €130 billion on the previous quarter.

The analysis also found that every sixth euro German clients put to work in funds was invested in products with sustainability features, compared to every 20th euro a year ago.

In the new issue, BVI wrote: "The strong growth in 2021 is driven by the conversion of existing funds as a result of the introduction of the SFDR.

“On the other hand, it is due to the strong increase in investor interest in sustainable investments.”

Since March 2021, BVI takes into account in its analysis funds that BVI members have classified, in accordance with the Sustainable Finance Disclosure Regulation, as Article 8, which is those that have a sustainability strategy, and Article 9 funds, which are funds that contribute to the UN’s sustainability goals. Prior to March 2021, the BVI’s analysis only referred to funds that met the criteria of the BVI Code of Conduct.

Alongside an increase in investment, BVI found that the market for retail funds with sustainability features has also become more diverse. Equity (35%) and real estate (14%) investments account for roughly the same share of all products with sustainability features as they do of total fund assets.

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