Posted inDACHEquities

German fund buyers: Europe’s biggest equity fans

According to our freshest data, seven in 10 fund selectors in Germany intend to increase their allocation to European equities in the next 12 months, a higher share than in any other country. On average in Europe, only slightly over half of fund buyers plan to up their exposure to the asset class.

Sentiment regarding US equities is at the other end of the scale, with all countries harbouring more bears than bulls. But also here, the Germans are the most benign: though 27% of fund buyers in the country plan to decrease their allocation to US equities, 18% are being contrarian and are planning an increase. Again, this is a higher number than in all other countries.

 

 

 

 

 

 

 

 

The Germans don’t top the buyers’ rankings for the other equity categories such as emerging markets, frontier markets and Japanese equities, but they are still more bullish than most of their peers in Europe.

German investors’ positive attitude to equities has already translated into increased flows into equity funds. According to data provided by the German asset management association BVI, inflows into equity funds outstripped those into multi-asset funds in November, for only the second time this year. The latter saw inflows of €2.6bn, while equity funds welcomed €3.3bn of net new money.

Great Rotation

The other side of the coin is that the Germans are decreasing their fixed income positions. While they are Europe’s most bullish on equities, they are also the heaviest sellers of investment grade bonds. Some seven in 10 Germans, the same percentage that intends to increase their European equity weighting, plan to decrease their exposure to government bonds. Corporate bonds are also out of favour, but to a lesser extent.

 

 

 

 

The negative German attitude to bonds also corresponds with recent fund buying activity. There are tentative signs of a ‘great rotation’ among the once bond-loving Germans, as net outflows from bond funds amounted to €1.5bn in November, the highest such outflows in four years. It remains to be seen, however, whether the Germans will hold their nerves if the equity markets’ start to the year happens to be just a foretaste of what’s to come in 2016…

Part of the Bonhill Group.