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Sustainable funds surge to 40% of German market

/Germany1Sustainable strategies now account for 40% of the German retail fund market, according to data from the German Investment Funds Association (BVI).

Volatility linked to the war in Ukraine had little impact as assets in these funds surged to €563 billion as of March 2022, the BVI revealed in its latest ‘snapshot sustainability’ update.

Over the past year, assets under management with sustainable funds have increased by 80%.

However, according to the BVI, the main reason is the conversion of existing funds.

Net inflows amounted to around €5 billion euros in the first quarter; after strong new business in January, sustainable retail funds suffered slight net outflows in February and March for the first time in two years.

However, ‘spezialfonds’, or sustainable funds focused on the institutional market, assets fell to €120 billion after a decrease of €6 billion from the previous quarter.

This decrease was largely attributed to falls bond prices as 40% of spezialfonds are fixed income focused. Demand remained strong over this period with these strategies still attracting net new client money of €2 billion.

New data has also been released by the BVI on how many strategies in Germany are classified as Article 8 funds (funds with environmental and/or social characteristics) and Article 9 (funds that contribute to at least one sustainability objective) according to the Sustainable Finance Disclosure Regulation (SFDR).

The former account for more than 96% of sustainable retail fund and spezialfond assets, while Article 9 funds only manage around €22 billion.

According to the trade body, this is likely due to uncertainty regarding definitions, data and future regulatory requirements for impact-oriented and investments.

Morningstar Direct data shows that German investors account for just under 5% of the assets of Article 9 funds launched in the EU, compared to 28% figure of all conventional and sustainable funds.

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