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German investors buy US debt on downbeat sentiment

German investors buy US debt on downbeat sentiment

Fixed income denominated in US dollars saw the biggest share of inflows by German investors in May as uncertainty over eurozone debt woes continued, according to data from the German fund association, Bundesverband Investment and Asset Management (BVI).

Excluding passive investment in Exchange Traded Funds, equity funds saw net outflows of €2.4 billion from German investors in the same month.

The allocation trend towards safer assets saw €1.6 billion of inflows into greenback currency assets in May. This followed a total of €3.6 billion of inflows into US fixed income by German investors in the first five months of this year.

In the same five-month period, appetite maintained strong amongst bond investors towards corporate bonds (€3.2 billion) and emerging markets (€3.2 billion).

German 'Spezialfonds' specifically tailored to institutional clients, otherwise referred to as segregated accounts, were shown to continue to hold a key role in the German market as demand for safer and more flexible structures rises.

BVI data which tracks the investment flows within the German funds industry, showed investment into ‘Spezialfonds’ totalled €1.2 billion in May.

This follows a trend which saw money from institutional investors reach €4.3 billion in inflows in segregated accounts in April this year, according to BVI.

‘Due to the stability in the regulatory framework, segregated accounts will continue to have a very important role to play in the allocation of social capital and financial capital in Germany,’ said Thomas Richter, director at BVI commenting on a recent report on the fund structure.

Investor sentiment continues to flock to safety by investing in long-term funds as shown with recent data from the European Funds and Asset Management Association (EFAMA).

Euroep-wide inflows into long-term funds, excluding money market products, increased to €248 billion in the first quarter of 2012 – a stark contrast to the €11 billion of the previous quarter.

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