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Asset Manager Survey 2024: What are the biggest challenges for foreign fund managers in Germany?

Client-specific requirements (25%), Germany’s decentralised structure with its various financial centres (19%) as well as fund information in German and access to distribution partners (18% each) are the biggest challenges for foreign investment companies in the German market. Fund-related regulation (9%) and recruiting of qualified staff (7%), on the other hand, pose fewer hurdles.

Only three out of ten fund managers plan to offer more so-called “article 8 funds” by the end of this year, but only 15% will increase their offering of article 9 or impact funds.

The proportion of women has increased at half of the foreign fund houses, while it has not changed for 43%.

Four years after the outbreak of the COVID pandemic, the rules for working from home have changed. Three quarters of respondents are once again working more days from the office than from home.

These are the key findings of the annual online survey “Biggest challenges for foreign fund managers in the German market”, conducted by Gerle Financial Communications, a specialised communications consultancy for the financial services sector. 28 representatives from foreign fund companies, external sales representatives (Third Party Marketers) and service providers for the fund industry took part in the survey in March 2024. It was the fifth survey of its kind.

44% manage more than EUR 1 bn assets in Germany

20 of the participating companies came from Europe, including five from France and four from the UK. Six came from the US and one each from Canada and Chile. Together, the companies represent global assets under management totalling around EUR 6.5 trillion.

In terms of Germany alone, four out of ten (41%) of the fund managers surveyed manage assets of up to EUR 500 million, with seven per cent of respondents having less than EUR 100 million to date. Eleven per cent stated that they manage up to EUR one billion in Germany, with 22% managing between EUR one and five billion and over EUR five billion, respectively.

85% of respondents (24 companies) have been present on the German market for more than five years, two companies (7%) between one and three years and one participant each between three and five years or less than one year respectively (4%).

In terms of their legal status, more than half (57%) of foreign fund houses now operate their own branch in Germany. Just under one in five (18%) gets support by external sales representatives (Third Party Marketers). The same proportion (18%) works with an employee who travels from headquarters abroad to Germany for customer appointments.

Client-specific requirements and decentralised structure are biggest hurdles

The biggest challenge for foreign fund companies entering the German market – for the third year in a row – are client-specific requirements (25%), e.g. in the areas of reporting and taxes. 19% said that Germany’s decentralised structure with its various financial centres posed an issue to them. 18% each find it difficult to provide fund-related information material in German or to gain access to sales partners.

At nine per cent, the regulation of funds in Germany is seen as less of an obstacle compared to previous years. On the other hand, more respondents (7%) than last year identified the recruitment of qualified staff as a problem.

Regulation is more work in Germany than in domestic markets

“Do foreign investment companies in Germany have more, less or just as much work to do with the following key challenges for the sector: regulation, new work/home office, ESG/SRI and digitalisation?” was another question.

As it turns out, regulation still causes foreign fund companies and their employees more work in Germany compared to their home market: 52% confirmed this, with 44% stating that regulation in Germany causes them just as much work as in their home market.

Another, obviously time-consuming issue is the process of monitoring, selecting and managing sustainable and socially responsible investments (ESG/SRI): Just over a third of respondents (37%) stated that this was more tedious in Germany than in their respective home market. More than half (56%) had just as much work with ESG/SRI in Germany as at home.

With 74% of responses, digitalisation causes fund managers in Germany just as much trouble as in their home countries. And regarding “New Work/Home Office”, even 81% see no difference in the effort required for remote and home working between Germany and their country of origin.

Number of new article 8 and 9 funds falls drastically

It is difficult to say whether investment companies have largely made their fund range “ESG-compliant” or whether their enthusiasm for registering new funds under the EU’s SFDR regulation has waned. In any case, only three out of ten companies still want to launch further so-called article 8 funds by the end of this year. In the case of article 9 funds, only 15% are planning new fund launches. One company representative stated that they even intend to reduce their offering in this category of impact investing compared to the previous year.

Four years after COVID: 75% work more in the office than from home again

Four years after the outbreak of the COVID pandemic, the rules for working from home have changed. However, the long-established freedom to work primarily outside the office appears to have been revoked: According to the survey, three quarters of respondents are once again working more days from the office than from home.

For half of the respondents, “two days from home, three in the office” is the most common working model of their employer or client. For two out of ten participants, however, it is only one day at home and four in the office. 18% said that they were “completely free” to decide how often they wanted to work from home. Three per cent work three days at home and two in the office, while four per cent each have a “different arrangement” or work in the office all week.

Increased proportion of women in the workforce, more hires in sales

For the second time, respondents were asked whether the proportion of women working in investment companies had changed: Half of the participants answered that this ratio had increased in the past year. 43% stated that it had remained the same; seven per cent were unable to give precise details.

“Has the workforce of your employer/client recently increased, decreased or remained the same in core areas?” was another question. According to this, the largest increase was in “Sales” (52% more jobs compared to 41% “unchanged” and 7% “fewer”), followed by “Other departments” (more: 33%, unchanged: 46%, fewer: 31%) and “Marketing” (more: 31%, unchanged: 61%, fewer: 8%). “Business Development” had the smallest increase in staff, with only 26% more but 70% unchanged.

Fund-of-funds managers and large institutional clients still most important target groups

The most important target groups for the distribution of foreign investment companies in the German market are fund-of-funds managers and asset managers with 89% of mentions as well as large institutional clients such as pension funds and insurance companies with 81% of mentions. (Single) Family Offices and private banks swapped places in 2024: SFOs are now considered the third most important client group with 78%; banks came in fourth place with 63%. Independent financial advisors accounted for 41% of the votes (multiple answers possible).

Equity and bond funds dominate product range …

Equity and bond funds (89% each) continue to be the dominant asset classes offered by foreign fund companies, followed by multi-asset funds (56%), hedge funds/absolute return strategies (37%), private debt (33%), real estate (26%), cash/currency products (19%), private equity and infrastructure (15% each), commodities and passive products/ETFs (11% each).

… but infrastructure, private debt and ETFs grew the most

The strongest growth compared to their product range when the asset managers launched in Germany, however, was recorded for multi-asset funds (+88%), infrastructure (+100%), private debt (+125%) and passive products/ETFs (+200%). Cash/currency products have increased by 66%, commodity funds by 50% and real estate funds by 40%. Only the range of private equity products offered by the companies surveyed has remained the same since the start of their business.

Image sources

  • GFC Info graphic AM survey 2024_ EN_small (17-05-2024): Gerle Financial Communications