Frankfurt am Main, May 5 2020

Corona pandemic: Institutionals increase investments in German government bonds and US treasuries

While the pandemic made world markets tremble, managers of Spezialfonds – the German type of institutional special funds – slightly increased their investments in government bonds and adjusted their allocation. This is the result of an analysis of Spezialfonds carried out by Universal-Investment, the largest fund service platform in the German-speaking region. Pension funds and pension schemes, but also insurance companies, foundations or corporates have increased investments in government bonds and US Treasuries during the corona crisis. By contrast, the proportion of securities from emerging markets as well as Spanish and Italian bonds has declined.

At the end of March, Universal-Investment administered a total of 329 billion euros in Spezialfonds. 138 billion euros of this volume, or around 42 percent, are invested in fixed-income securities. Government bonds account for almost 38 billion euros, equalling around eleven per cent of total investments or 26.5 per cent of the bond segment. At the end of 2019, the comparative figure was 36.5 billion euros or 25.7 per cent of all fixed-interest securities. As of 31 March, 11 billion euros or 29 per cent of government bonds were invested in German government securities, 4.5 billion euros or 12 per cent in US bonds.

Bonds issued by Italy and Spain declined since the beginning of the year. French bonds remained stable with a share of 10 per cent, as did British Gilts, which have, however, been of little significance in terms of volume for many years now. They only account for 1 per cent.

Government bonds integral part of portfolios during corona crisis

Emerging markets titles declining, but still in second place

Trend towards broader international spread continues – with regional differences

Government bonds from emerging markets, according to the MSCI Emerging Markets Index, together still form the second strongest group of institutional fund investments, but their volumes came under pressure during the crisis: their share fell from 15 per cent at the beginning of the year to 13 per cent.

"A balanced variety of investments is becoming increasingly important to our customers - especially in volatile times like the ones we are currently experiencing," observes Katja Müller, member of the management board and Chief Customer Officer at Universal-Investment. "In addition to more diversity across all asset classes, we also see an ever-increasing global spread in the traditional bond segment. Our clients' portfolios are as individual as their investment goals or risk profiles. This year we have added securities from such exotic countries as Laos and Mozambique." The development of volumes by country varied considerably in the first three months of the year: while investments in government bonds from China or Japan rose slightly, positions from Indonesia, Colombia, Qatar or Mexico declined.

Bernd Obergfell

Head of Communications

Phone
+49 69 71043-575

e-mail
bernd.obergfell@universal-investment.com

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