Latest news with #StefanHoops
Mint
26-05-2025
- Business
- Mint
Germany ‘Strongly' Urges Funds to Be Open About Defense Bets
(Bloomberg) -- Germany's financial watchdog is urging asset managers to be transparent about adding defense holdings to funds marketed as sustainable, amid concerns a sudden rise in such positions may upset some clients. The guidance follows a decision by Germany's investment lobby to update exclusion standards, opening the door to a considerable increase in defense allocations. Asset managers say it's a way to align investing goals with the bloc's political agenda, as Europe adjusts to an increasingly entrenched war in Ukraine. The worry, however, is that investment clients who signed up for sustainable assets may balk at seeing their money go toward weapons of war. 'Issues that could be controversial need to be visible,' said Rupert Schaefer, chief executive director of strategy, policy and control at Germany's Federal Financial Supervisory Authority, or BaFin. 'We strongly recommend that firms don't disappoint their clients with insufficient clarity,' he said in an interview. Europe's finance sector is in reset mode as fund managers from Scandinavia to France look for ways to support defense assets whose geopolitical significance has soared in the face of war and souring ties with the US. The pivot has also helped boost returns for ESG portfolios after years of underperformance. Funds that invested in Germany's Rheinmetall AG at the start of the year, for example, have been buoyed by its almost 200% rise in value. In December, the German finance industry changed its so-called Target Market Concept, which had excluded many defense investments from funds that take account of environmental, societal and governance factors. DWS Group subsequently adjusted its documentation for certain funds, scrapping a threshold that ruled out companies with over 10% of revenue from defense activities. DWS Chief Executive Officer Stefan Hoops has said the development could free up 'hundreds of billions' of euros across Germany's asset management industry. Other money managers have also adjusted their approach. In March, Allianz Global Investors informed clients that it would also lift existing restrictions on military equipment and services for some funds. Schaefer, whose role includes steering BaFin's approach to sustainable finance, didn't name any firms. 'The presence of such investments in an ESG portfolio isn't something that should be relegated to the fine print,' he said in his office in Bonn. 'It's up to them how they go about it, whether via their websites, via the pre-contractual disclosure or in client conversations with advisers. The industry knows how to reach their clients.' The changes are playing out as ESG funds struggle to hold on to clients. Last year, investors pulled about €9 billion ($10.2 billion) from German mutual funds with sustainability features, according to industry lobby BVI. It's a trend that's reflected across regions, with Morningstar Inc. estimating that the global market for ESG funds suffered its worst outflows ever last quarter. More generally, Schaefer said 'there's significant room for improvement on disclosures to help ESG impact investors take decisions. The discussions around greenwashing persist and we hear from end investors who are overwhelmed by all the information and claims provided for ESG products,' he said. The success of sustainable financial products hinges on practical regulation in the European Union, according to Magdalena Kuper, head of sustainability at BVI. While existing guidelines provide 'initial orientation' for investors interested in sustainability, disclosure rules need to feature 'simple to understand product categories' to create a comprehensive market standard, she said. 'We can't afford any more experimental regulation for sustainability,' she said. The ESG investment industry's foray into defense assets comes amid a wider European Commission review of the bloc's Sustainable Finance Disclosure Regulation. BaFin supports the idea of 'basic product categories,' Schaefer said. The watchdog is 'bringing our ideas to the table,' and the sense inside the German regulator is that 'many others share our position,' he said. When it comes to SFDR, 'it's also about increasing its effectiveness, and simplification, including reducing costs,' he said. 'It's going to mean fewer rules. And fewer, but clearer, disclosures.' (Adds Hoops comment in sixth paragraph.) More stories like this are available on
Business Times
08-05-2025
- Business
- Business Times
Retail investors pull US$13 billion from property funds in Europe
[LONDON] Retail investors are continuing to pull money from European real estate funds as rising levels of defaults and higher interest rates limit the attractiveness of the industry. Mom and pop investors yanked 11.44 billion euros (S$16.7 billion) in the year through March from products domiciled in the region, according to data compiled by Morningstar, 20 per cent more than in the previous 12 months. Monthly euro-denominated real estate fund flows have been negative since February 2023, said the data provider, which tracks open ended and exchange traded products. Commercial real estate can take years to buy and sell and is valued periodically, meaning funds' reported valuations can be slow to adjust in periods of uncertainty. The can encourage investors to pull cash from vehicles before the assets are fully marked down. Many also have significant exposure to office properties, the value of which have further suffered from shifting working patterns and more stringent environmental regulations. That's made it harder for fund managers to return capital to investors that want out, prompting some to close. St James's Place, a UK wealth manager, is winding down its real estate funds after significant withdrawals while Aegon closed funds after they failed to grow in size as much as expected. Goldman Sachs Group shuttered a global real estate securities fund last month. The product had lost money for investors over five years, according to its annual report. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Real estate has also been losing out to other asset classes seen as offering better or more secure returns, including infrastructure and private credit. Investors pulled about 500 million euros from property funds managed by DWS Group's alternatives business in the first quarter. 'European real estate will continue to be probably in slight outflow, given that we still have to get through the tail end of the notifications we received over the last 12 months,' chief executive officer Stefan Hoops said on a call with analysts last week. 'We are more optimistic on the future path.' Hopes of a rebound in real estate values this year after central banks began to cut interest rates have so far not played out in many sectors. Hotel valuations in the US fell 2.8 per cent hit last month, according to researchers Green Street, as international tourism tumbled. The overall index was down 0.5 per cent. European real estate funds now oversee about 156 billion euros compared with just under 200 billion euros in February 2023, according to Morningstar. BLOOMBERG
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Business Standard
07-05-2025
- Business
- Business Standard
Deutsche's DWS, Nippon Life in early talks for India asset management deal
Deutsche Bank's investment arm DWS is in talks to form an asset management joint venture in India with the Japanese insurer Nippon Life, four people with knowledge of the matter said, as the German company seeks to expand in Asia. The negotiations are at an early stage and expected to take time due to regulatory issues, said the people, asking for anonymity to allow them to describe the private talks. DWS, with more than 1 trillion euros ($1.13 trillion) in assets under management, is one of Europe's biggest fund managers. Nippon Life, as Japan's largest insurer, has been on an international buying spree. The discussions, which have not previously been reported, follow a breakdown in talks for a separate DWS joint venture in China that marked a setback for Deutsche's Asia ambitions. They are another example of foreign financial firms turning to India, the world's most populous country with a growing middle class. Last year, Indian regulators gave initial approval for a mutual fund business between Jio Financial Services, owned by the billionaire Mukesh Ambani, and BlackRock, the world's largest asset manager. Nippon Life and DWS already have a relationship in that the insurer owns 5 per cent of the German company and the two work together in areas such as distribution. DWS and its majority-owner Deutsche Bank, Germany's largest lender, both declined to comment, while Nippon Life in Japan declined to confirm the talks. In a significant shift, DWS CEO Stefan Hoops said he was ready for inorganic growth after years of recovery from the upheaval surrounding greenwashing accusations. He told analysts last week the focus was on Asia and he imagined "the next couple of months to be quite interesting". Nippon Life became DWS's second-largest investor after it bought its 5 per cent stake when Deutsche Bank listed DWS in 2018. Deutsche retained control with 79 per cent. Ever since, Nippon Life and DWS have had a strategic alliance, encompassing areas including distribution and research. DWS has long said it would work with partners to expand in Asia. Nippon Life already operates a fund management business in India with 5.67 trillion Indian rupees ($67.18 billion) under management, and it cooperates with DWS on a European-listed India government bond exchange traded fund. Regulators in India at the end of last year eased rules to allow fund houses to launch passive-only funds through a spin-off entity and with easier compliance requirements as compared to fund houses who manage active funds. DWS and Nippon Life could take advantage of the change to launch a separate jointly owned company for ETFs and passively managed funds, said one of the people with knowledge of the discussions. Meanwhile, in China, DWS aims to increase its 30 per cent stake in the Chinese fund manager Harvest. For years, Deutsche Bank, DWS and Chinese lender Postal Savings Bank of China were in talks for a joint venture, but those talks collapsed after the German companies resisted Beijing's demands to raise their stake in the deal.
Mint
24-04-2025
- Business
- Mint
Deutsche Bank's Fund Arm Cuts Limits on Defense Assets
(Bloomberg) -- Deutsche Bank AG's investment unit is removing restrictions that had prevented a number of its funds from holding defense assets, according to its chief executive officer. The move, made possible by a recent adjustment in Germany's investment guidelines, has the potential to free up 'hundreds of billions' of euros across the country's asset management industry for defense allocations, DWS Group CEO Stefan Hoops said in an interview on Wednesday. It's part of a wider reset across Europe's investment industry, as fund managers from Scandinavia to France look for ways to support an industry whose geopolitical significance has soared in the face of war and souring ties with the US. The pivot has also helped boost investment returns, with defense assets such as Germany's Rheinmetall AG having more than doubled in value this year alone. Industry rules for funds marketing themselves as ESG (environmental, social and governance) used to largely exclude arms manufacturers, but 'that has now changed,' Hoops said. That's also due to the defense sector's financial performance, he said. Several industry standard setters for the German asset management industry late last year agreed to change a rule known as ESG Target Market Concept, DWS said in a separate statement to Bloomberg News on Wednesday. Developed in 2021, 'when there were no standards for sustainable products in the EU,' the rule excluded many defense investment from ESG funds. The decision to change the guidelines applies across Germany, enabling the country's asset managers to open ESG funds to defense investments. DWS is now in the process of adjusting the documentation of funds applying its DWS Basic Exclusions filter, according to the statement. The change, which will go into effect by May 21, will scrap a threshold that had prevented funds from holding companies that got more than 10% of their revenue from defense activities. It will also free funds to add shares of companies linked to nuclear weapons, DWS said. The adjustments mean that 34 members of the MSCI World Index — accounting for 2.26% of its weight — will be added to the universe of investable firms for DWS funds previously subject to defense restrictions, according to the statement. The asset manager's Controversial Weapons policy, which excludes cluster munition and other arms, continues to apply, it said. 'The Target Market Concept has to change for the industry, then the prospectuses have to change, and then we can make the changes,' Hoops said in the interview, explaining how the changes take effect. DWS isn't planning to put all the money that's unlocked by these adjustments into defense, Hoops said. 'But if the question is, what quantum of funds can then all of the sudden start investing, those are hundreds of billions of notional that can then start investing in defense.' 'There will definitely be a catch-up,' Hoops said. 'There's no question about that.' (Corrects preposition in seventh paragraph to 'by' from 'on'.) More stories like this are available on First Published: 24 Apr 2025, 01:19 PM IST
Mint
23-04-2025
- Business
- Mint
Deutsche Bank's Fund Arm Cuts Limits on Defense Assets, CEO Says
(Bloomberg) -- Deutsche Bank AG's investment unit is removing restrictions that had prevented a number of its funds from holding defense assets, according to its chief executive officer. The move, made possible by a recent adjustment in Germany's investment guidelines, has the potential to free up 'hundreds of billions' of euros across the country's asset management industry for defense allocations, DWS Group CEO Stefan Hoops said in an interview on Wednesday. It's part of a wider reset across Europe's investment industry, as fund managers from Scandinavia to France look for ways to support an industry whose geopolitical significance has soared in the face of war and souring ties with the US. The pivot has also helped boost investment returns, with defense assets such as Germany's Rheinmetall AG having more than doubled in value this year alone. Industry rules for funds marketing themselves as ESG (environmental, social and governance) used to largely exclude arms manufacturers, but 'that has now changed,' Hoops said. That's also due to the defense sector's financial performance, he said. Several industry standard setters for the German asset management industry late last year agreed to change a rule known as ESG Target Market Concept, DWS said in a separate statement to Bloomberg News on Wednesday. Developed in 2021, 'when there were no standards for sustainable products in the EU,' the rule excluded many defense investment from ESG funds. The decision to change the guidelines applies across Germany, enabling the country's asset managers to open ESG funds to defense investments. DWS is now in the process of adjusting the documentation of funds applying its DWS Basic Exclusions filter, according to the statement. The change, which will go into effect on May 21, will scrap a threshold that had prevented funds from holding companies that got more than 10% of their revenue from defense activities. It will also free funds to add shares of companies linked to nuclear weapons, DWS said. The adjustments mean that 34 members of the MSCI World Index — accounting for 2.26% of its weight — will be added to the universe of investable firms for DWS funds previously subject to defense restrictions, according to the statement. The asset manager's Controversial Weapons policy, which excludes cluster munition and other arms, continues to apply, it said. 'The Target Market Concept has to change for the industry, then the prospectuses have to change, and then we can make the changes,' Hoops said in the interview, explaining how the changes take effect. DWS isn't planning to put all the money that's unlocked by these adjustments into defense, Hoops said. 'But if the question is, what quantum of funds can then all of the sudden start investing, those are hundreds of billions of notional that can then start investing in defense.' 'There will definitely be a catch-up,' Hoops said. 'There's no question about that.' More stories like this are available on First Published: 23 Apr 2025, 09:31 PM IST
