Demand for Funds Set to Take Off
June 1, 2002
As part of a Europe-wide growth in demand for investment funds, the total sum invested in public funds in Germany will double from the present 400 billion euros to 800 billion euros by 2006, according to a study by Cerulli Associates, the renowned London-based analyst and consultancy firm.
Rolf Elgeti, finance-market strategist at Commerzbank AG, is expecting a similarly strong growth push. And Frank Bock, spokesman for industry association BVI, is confident. He said people are saving 10% of their annual income, and the funds sector is expecting to attract one third of the total investment volume.
Petra Kachel of Germany's DAI share institute believes that the most important single influence will be Germans' growing use of private provision for old age. She referred to the pension reforms of Labor Minister Walter Riester, which are decide to encourage the use of private pensions to back up a state system that is coming under increasing pressure as a result of demographic changes. She said if the Riester regulations are made simpler and more transparent, they will serve as a real growth turbo for the funds sector.
Commerzbank's Elgeti is expecting equity funds in Germany and the euro zone to receive a boost from share-price gains, as shares become a more attractive form of investment, owing to tax reform and growing company transparency. He's expecting shares to produce average annual returns of 8.5% over the next two decades.Even today, it would be wrong to write off equity funds, despite the turbulence on the markets.
According to a survey by DAI, the proportion of German fund investors buying into equity funds last year rose by a percentage point to 11%.