What do asset managers think is the biggest growth opportunity?
Germany is in the midst of radically reforming its pension system, which asset managers across Europe believe to be “one of the most significant structural growth opportunities” for years (Ralf Hirschberger/AFP)
Good morning. As we covered not so long ago, Germany is in the midst of radically reforming its pension system to make it somewhat more similar to Sweden’s system.
As a brief refresher: the Swedish system includes a mandatory pension top-up component into which savers can invest in the funds selected by the Swedish Fund Selection Agency. If they do not do so, their savings will be invested in the default fund - the $148bn AP7. This is what Germany is copying from January.
A side effect of this is that it will turn Germans into a nation of fund investors (at least that's the plan), and make Germany a much more fertile ground for fund management houses. And boy have they noticed.
Just a couple of weeks ago - not long after Germany’s pensions commission published its report - Stefan Hoops, chief executive of DWS, called the reforms “one of the most significant structural growth opportunities for DWS in the coming years”.
Hoops said the reforms to the third pillar (the bit described above) would create a market of about 50m people - more than half of Germany’s population - who were “no longer confined to expensive, low-returning products”.
DWS has set up a “dedicated project team” to address this opportunity.
Meanwhile Fidelity has announced plans to enter this market, as well as Franklin Templeton.
Speaking to analysts recently, Amundi chief executive Valerie Baudson said the German reforms were a “significant growth area” and that the $2.7tn asset manager had signed two distribution deals to support it.
She said: “Right now, the most important focus is on Germany because of this new reform happening.
“We’re really working very hard on it, and it was very timely to launch our [retirement solution business] six to 10 months ago, to make sure we had all the force and strength to be able to answer this reform in Germany.”
