Short presentation InstiPortal: Institutional Investors in Germany May 2018
Background German institutional investors manage more than €3 trillion, of which €1.8 trillion is in (indirect) pensions Assets of institutional investors in Germany Assets Growth € billion 10 years 3.500 In billion € 65 50 Foundations / Churches 3.000 52 Church / Municipal Pension Funds 130 >100% 136 Company Pension Funds 164 66% 2.500 200 Proprietary / Casualty Insurance Companies 169 20% 2.000 91 Pension Funds of liberal Professions 205 81% 28 Reinsurance Companies 262 1.500 27% 46 Health Insurance Companies 273 91% 1.000 80 Corporate DAX/MDAX 292 76% > 400 Proprietary custodial accounts (Depot A) 485 28% 500 84 Life insurance companies 1,020 41% 0 2007 2012 2017 Σ 3.1 trillion May 2018 Short presentation – InstiPortal 2
Background The institutional investor landscape in Germany is highly fragmented, with the volume distributed across more than 500 institutional investors Number of investors in the InstiPortal broken down by investment volume 140 € billion 130 120 110 100 90 80 70 60 50 40 30 20 10 0 > 20 10 - 20 5 - 10 2,5 - 5 1 - 2,5 0,5 - 1 0,25-0,5 0,1-0,25 Source: Analysis of the InstiPortal as of January 2018, not including proprietary custodial accounts (Depot A of savings banks and credit union banks) May 2018 Short presentation – InstiPortal 3
Background Unlike in other European countries, the capital volume is also heavily divided up across the regions. Number of investors in the InstiPortal broken down by postal code area 90 80 70 60 50 40 30 20 10 0 PLZ 0 PLZ 1 PLZ 2 PLZ 3 PLZ 4 PLZ 5 PLZ 6 PLZ 7 PLZ 8 PLZ 9 Source: Analysis of the InstiPortal as of January 2018, not including proprietary custodial accounts (Depot A of savings banks and credit union banks) May 2018 Short presentation – InstiPortal 4
Background Investors are very individual with regard to their asset allocation Example: Pension fund for liberal professions Example: Pension fund €10 billion €1.8 billion Renten direkt Bonds (direct) Rentenfonds Bond Funds Hypo Mortgages Infrastructure (Equities, bonds, financing) Government/municipal bonds Aktien Equities Private equity Fixed-term bonds Immobilien direkt Real Estate (direct) Natural resources Corporate bonds Direct lending Immobilienfonds Real Estate Funds Alternatives Alternatives Einlagen, sonstiges Deposits, miscellaneous May 2018 Short presentation – InstiPortal 5
Background Asset allocation at many institutions is in a constant transition process, with direct investment in bonds becoming significantly less important. Transition process for pension funds for liberal professions Transition process for life insurance companies 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 2009 2010 2011 2012 2013 2014 2015 2016 2009 2011 2012 2013 2014 2015 2016 Example of municipal pension funds Transition process for company pension funds 70% 80% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 2016 Direct investment in bonds Indirect investment in funds May 2018 Short presentation – InstiPortal 6
Background Compared to other asset classes, the equity ratio has raised below average by many investors. Many have not yet reached their pre-crisis level. Number of investors by equity ratio Equity ratio by group of investors 25% Base: 59 Life Insurance companies with Assets of €877 Bn., 20% > 25% 25 Health Insurances (269), 48 Corporates (318), Stiftungen, Kirchen, Found., Churches, muni- 15% 38 Company Pension Funds (98), kommunale / kirchliche ZVK cipal/church pens. funds 41 Pension Funds of liberal professions (169), Versorgungswerke Pension Funds of lib. prof. 37 municipal/church pension funds, Dioceses and 10% Foundations (130) 20 - 25% Pensionskassen Company Pension Funds Status: 5% Corporates/Insurance Companies 31.12.2017, Others 31.12.2016 Corporates Corporates 0% KV LV PK VW Sti, Ki, KuK Corporates Health Ins. Life Ins. Comp. PF Liberal Prof. Fou/Chu/Mun Corporates 15 - 20% Krankenversicherungen Health Insurance Comp. • The equity weighting varies widely depending on the group of investors, often Lebensversicherungen Life Insurance Companies influenced by regulatory and product-specific conditions 10 - 15% • With an average of around 22%, corporates - which are not subject to any regulatory investment restrictions - have the highest ratios; before the financial crisis, however, the level was well above 30% 5 - 10% • Insurance companies continue to have low exposure at around 5%, around a quarter of life insurance companies have no equities (<1%) 1 - 5% • Pension funds for liberal professions have significantly expanded their equity investments to more than 15% on average, a ratio below 10% is the exception < 1% • Company pension funds have also increased their equity exposure (~ 10%) 0 5 10 15 20 25 Mai 2018 Short presentation – InstiPortal 7
Background The investment volume in real estate has increased considerably since the financial crisis with many investors. In particular, the indirect quota was expanded. Real estate ratio by group of investors Number of investors by real estate ratio 20% Base: Stiftungen, Kirchen, Foundations, Churches, 59 Life Insurance companies with Assets of €877 Bn., kommunale / kirchliche ZVK municipal/church pens. funds 25 Health Insurances (269), > 25% 15% 48 Corporates (318), Versorgungswerke Pension Funds of liberal prof. 38 Company Pension Funds (98), 10% 41 Pension Funds of liberal professions (169), 37 municipal/church pension funds, Dioceses and Pensionskassen Company Pension Funds Foundations (130) 20 - 25% 5% Status: Corporates/Insurance Companies 31.12.2017, Corporates Corporates Others 31.12.2016 0% Krankenversicherungen KV LV Corporates PK Sti, Ki, KuK VW Health Insurance Companies Health Ins. Life Ins. Comp. PF Liberal Prof. Fou/Chu/Mun Corporates 15 - 20% • The real estate exposure has been significantly expanded by many investors Lebensversicherungen Life Insurance Companies • First and foremost pension funds for liberal professions, which have invested more 10 - 15% than 15% of their assets in real estate on average; some are coming up against regulatory limits • Insurance companies have only slightly increased their real estate exposure to just 5 - 10% over 4%, but this is based on an absolute volume of around € 40 bn • Numerous company pension funds as well as foundations and church and municipal institutions also have a big real estate portfolios 1 - 5% • More restrained are corporates, which on average have not increased their quota in recent years and have invested less than 5% in real estate < 1% • Often, the indirect ratio has been increased via funds and, to some extent, also investments in special segments (eg project developments, student residences) 0 5 10 15 20 25 Mai 2018 Short presentation – InstiPortal 8
Motivation So far there is no systematic and constantly updated report on the institutional investor landscape in Germany • Many publications only discuss investor groups as a whole, but do not provide detailed information on the structure, asset allocation and performance of individual investors • (International) databases are often based on surveys / interviews; the advantage there is that they are up to date and focused on the future, but the results are often incomplete or distorted since only a few investors are interested in combing through details or do not act according to their original plan • Individual investor groups such as pension funds for the liberal professions or municipal and church pension funds are frequently left out despite their importance • Often, only individual circumstances are considered (for example, guaranteed interest, coverage) • Books are usually not up to date or have a long time lag May 2018 Short presentation – InstiPortal 9
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