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Sustainable funds now account for 40% of the German market

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

Assets in these funds increased to €563 billion in March 2022, despite volatility linked to the Ukraine conflict, according to the BVI's latest'snapshot sustainability' update.

Assets under management with sustainable funds have increased by 80% in the last year.

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

In the first quarter, net inflows totaled around €5 billion; however, after a strong start in January, sustainable retail funds experienced net outflows in February and March for the first time in two years.

Assets of 'spezialfonds,' or institutional-focused sustainable funds, fell to €120 billion in the third quarter, down €6 billion from the previous quarter.

The drop was largely due to falling bond prices, as fixed income funds account for 40% of all spezialfonds. During this time, demand remained strong, with these strategies attracting €2 billion in new client money.

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

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

This is likely due to uncertainty about definitions, data, and future regulatory requirements for impact-oriented and investments, according to the trade group.

According to Morningstar Direct data, German investors own just under 5% of the assets of Article 9 funds launched in the EU, compared to 28% of all conventional and sustainable funds.



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