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. Last Updated: 07/27/2016

Riskier Funds Draw Germans

FRANKFURT -- The traditionally sleepy German funds sector is seeing something of a revolution, as younger investors lead the charge from steadier bonds into higher-yielding, riskier equity funds.


German investors have traditionally shunned shares in favor of bonds, but fund managers say Germany is now among the fastest growing markets for equity-based funds.


Currently only around 5.5 percent of private financial assets in Germany are invested in shares, compared with 35 percent in Sweden, 21 percent in the U.S. and 17.5 in Britain.


Germany has revamped its investment sector in recent years, tightening up securities trade surveillance and introducing a much-needed law on insider trading in a bid to make the market more transparent and thus more attractive to small investors.


Bonn is particularly keen to foster a retail shareholder culture before the multibillion mark flotation of Deutsche Telekom in November, which will need the goodwill of individual shareholders as well as institutions to succeed.


Change has so far been slow but perceptible, many small investors preferring funds to direct equity investment.


In 1990, just 13 percent of funds in Germany were equity funds, compared with a massive 73 percent in bonds.


But there was a clear increase by 1995 when equity-based funds made up 20 percent of the total, compared with 42 percent of funds investing in bonds.