German institutions are allocating increasing amounts of money towards investment in real estate and equity. Since peaking in 2013 at 80%, allocations to fixed income have steadily declined and reached 74% at the time of writing.
In a Greenwich Associates report, a German public pension fund was quoted saying: “The low interest rate environment makes it impossible to meet return targets. We have not yet found a solution.” Therefore some foundations have started to invest in higher risk assets.
The low-interest environment triggered conversations between some German institutions and investment managers about changing asset allocation. Lydia Vitalis, a consultant at Greenwich Associates, believes that this is unlikely to bring changes in short-term, since these questions have been lingering in the background for some time now.
However, firms like Allianz Global Investors and Union Investment have already discussed the possibility to broaden the portfolio strategies with several German institutions.
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