The results of Greenwich Associates 2014 German Investment Management Study suggest the themes of globalization and diversification will remain in place in coming years.

The pace of change within institutional portfolios has slowed over the past 12 months as investors contend with low rates and a list of specific challenges including the following:

  • The implementation of new rules is forcing banks to take actions that are not necessarily aligned to their strategic investment direction and systems and reporting capabilities are costly and time consuming.
  • Pensions funds are struggling to meet return targets as both corporate and public/industry pensions seek ways to generate yield in the low-rate environment. These efforts have been complicated by volatility in emerging markets.

Portfolio Allocations: Continued Diversification
Overall allocations to government bonds declined last year as German institutions continued to diversify fixed income portfolios. Looking ahead, Greenwich Associates anticipates some degree of additional rotation as institutions continue diversifying away from government bond exposures to fund additional diversification.

Although past plans to increase allocations to alternative asset classes failed to materialize last year, institutions’ ongoing search for yield is contributing to growing demand for real estate investments, particularly among public and industry pensions.

Greenwich Quality Leader
In a challenging period for the German asset management industry, institutional investors recognize Allianz Global Investors as providing top-quality service and for the fourth year in a row, the 2014 Greenwich Quality Leader in German Investment Management is Allianz Global Investors.

As part of its annual research, Greenwich Associates interviewed 258 individuals at Germany’s largest corporate, public and industry-wide pension funds, banks, foundations, churches, insurance and reinsurance companies, and other institutions. These institutions were asked to name the external investment managers they use for specific asset classes and to rate these managers on a series of investment and service criteria.