Partners in change
We have all had to face many new challenges since the start of the Covid-19 pandemic. But these challenges also present new opportunities which we can harness together from a position of strength.
Hans Joachim Reinke, Chairman of the Executive Board
Union Investment was able to report stable earnings for the 2020 financial year. At the same time, 2020 was a year that had a far reaching impact on us all. The omnipresent Covid-19 pandemic restricted social and economic life in many ways. In particular the necessity to maintain a distance from one another has massively affected how we live together. In our personal lives, we have had to forego gatherings with friends and family. Publicly and professionally, this has meant working from home, nightly curfews and the closure of businesses, as well as reduced contacts with clients. For all of us at Union Investment, this meant having to carry out two roles at the same time: We have had to support our clients as a partner during this crisis while at the same time restructuring our own processes.
Active asset management has proved its worth in times of crisis
At times, we had to contend with a very volatile stock market because of the challenges mentioned above. The strengths of our active portfolio management played a key role under these conditions as is reflected in the excellent investment performance of many of our investment funds. Very high ratings and awards from outside bodies confirm the quality of our work: For example, we managed to maintain our position as one of the best performers in the German Fund Champions League. We were also awarded the top rating of five stars for the 19th time in a row in the Capital Fonds-Kompass – a record unmatched by any other investment company. Spurred on by these achievements, we strive to expand our range of products and services to be able to offer our clients tailored solutions in today’s low interest rate environment.
Even if the long term effects of the pandemic cannot yet be predicted in their entirety, certain investment trends are already emerging. And these endorse the strategic course we had previously set.
The emergence of a low interest rate environment spurs evolution of saving
The Covid-19 pandemic and the entrenched low interest rate environment have made the evolution of saving even more important. The need to take action has become more urgent. For the foreseeable future, savers with money in low-interest current accounts or with savings or term deposits will lose money after inflation has been taken into account. Even today we are seeing a generation growing up that does not automatically assume that savings will multiply of their own accord. In order to ensure prosperity in mainstream society, savers need to rethink their investment strategies. That is why this matter is of particular importance to us. But the evolution of saving, i.e. saving with investment funds, is an important issue for banks, too. Because in these times of negative interest rates, constructively handling deposit business is becoming the key to their economic success.
“In order to ensure prosperity in mainstream society, savers need to rethink their investment strategies. That is why this matter is of particular importance to us. But the evolution of saving, i.e. saving with investment funds, is an important issue for banks, too. Because in these times of negative interest rates, constructively handling deposit business is becoming the key to their economic success.“
Hans Joachim Reinke
Chairman of the Executive Board
The high priority we have given over the years to security transactions within the Genossenschaftliche FinanzGruppe cooperative network has paid off, leaving us very well positioned. For example, despite the Covid-19 pandemic, we once again recorded significantly more net new openings in our investment fund savings plan last year than in the previous year, and in September we surpassed the three million mark for traditional investment savings plans.
Increased demand from investors for sustainable products
For many, the pandemic was a turning point, a cause for reflection, as well as an occasion for us to consider the kind of world we want to live in the future and what should be the foundation of our prosperity. These concerns, which have also been raised in the investment world, have given further impetus to the discourse on sustainability issues. In addition, there is increasing political pressure to restructure the economy. The sustainable transformation is being sponsored by huge investments. Both institutional and private investors want to play a part in this transformation.
Thanks to our long-standing expertise in sustainable investment and a range of established products, we are very well equipped to meet this demand. Just last year, 55 percent of our net new business with private savers went into sustainable investment products. But we are more than just a provider of suitable investment solutions. As a trustee and investor, we are committed to our responsibility to actively support the businesses in which we invest for our clients as these businesses transition towards sustainability. To accomplish this feat, we hold over 4,000 meetings with these businesses every year, highlighting the importance of active management.
As a trustee and investor, we are committed to our responsibility to actively support the businesses in which we invest for our clients as these businesses transition towards sustainability.
The advancement of digitalisation
Digitalisation has advanced by leaps and bounds during the Covid-19 pandemic. This can also be seen in the financial sector. The most obvious example is the move away from cash. But increased demand for digital solutions can also be seen in investment consulting. We anticipate that this trend will only strengthen over time. For those of us within the Genossenschaftliche FinanzGruppe cooperative network, this means examining our digital performance in a realistic light. Is our online presence sufficient? Can we effectively reach our clients and can they reach us? In recent years, we have collaborated with our partners to drive forward digitalisation with solutions such as MeinInvest, FikuInvest and VermögenPlus. We will continue this collaboration in the future to expand our spectrum of digital solutions.
Working together as partners is the key to our success
I am convinced that we will succeed. If the Covid-19 pandemic has shown us anything, it is that together, we can find the right solutions to every challenge. A trusting collaborative relationship at Union Investment and within the Genossenschaftliche FinanzGruppe cooperative network is one of the reasons for our sturdy and resilient business model, which we have continued to develop in recent years. I would like to extend my sincere thanks to our partner banks and colleague for their collaboration.