German investors in the DAX are in the minority

At the end of the year, the DAX reached new highs. However, retail investors are in the minority among stock market buyers. Who are the investors in the first place?

Author: Bianca von der Au, tagesschau.de

Insurance company Allianz, software manufacturer SAP, industrial group Siemens, car manufacturer Mercedes-Benz – they are all members of the DAX and thus belong to the most valuable listed companies in Germany. But who actually owns the DAX? “The DAX belongs to many people,” says Daniela Bergdolt, vice president of the German Securities Association, in an interview. tagesschau.de. “It belongs to private investors. It belongs to funds, it belongs to ETFs, it belongs to institutional investors. It also belongs to pension funds and government funds.”

Different Groups of investors

So there are different groups of investors. According to a joint study by the German Investor Relations Association and data specialist S&P Global, almost 13 percent of DAX shares belonged to private investors in 2022. In addition, so-called strategic investors played an important role. They held a 27 percent stake in the DAX. These can be family holding companies or foreign sovereign wealth funds and, in rare cases, the federal government at Commerzbank.

The largest part of the DAX cake was made up of the so-called free float, which are shares that can be freely traded on the stock exchange. In 2022, a total of 60 percent was in the hands of so-called institutional investors, i.e. asset managers, banks, insurance companies and pension funds.

According to Kay Bommer of the Investor Relations Association, one group was particularly well represented: American investors. “In terms of institutional free trading, they own over 43 percent, which is a very large share.”

“DAX Speaks English”

So is the DAX increasingly in the hands of US investors? Thomas Deser, portfolio manager of Union Investment, summarizes it further: “The DAX speaks English. Approximately two-thirds of the shares are in the hands of Anglo-Saxon, that is, American and British investors. And yet it is not exclusively American and British money. .” Although these institutional investors are based in the US and UK, their products are also used by German investors.

According to a study by the Investor Relations Association, the top DAX investors include large asset managers such as BlackRock, Vanguard and State Street. Your recipe for success: ETFs. These are exchange-traded funds that track an index such as the DAX. You don’t need an active asset manager to do this. This also means less administrative fees.

For several years now, the Bundesbank has observed that ETFs are becoming increasingly important for investors and for the financial system. Industry representatives see growing potential especially in ETF savings plans, in which you regularly invest a certain amount.

Investment manager works with customers’ money

The world’s largest asset manager, BlackRock, has an average stake of five percent in each DAX company. But it’s not BlackRock’s money, emphasizes German boss Dirk Schmitz tagesschau.de. It is the property of many millions of customers who entrusted their money to the American investment company. “Customers come to us and ask about our products.”

The DAX ETF is made up mostly of German private investors, says Schmitz, who is responsible for BlackRock’s business in Germany, Austria and Switzerland. Two-thirds of BlackRock’s client assets have been used to build retirement wealth.

“A shareholder is not a gambler”

Those who invest in supplementary pension insurance on the stock exchange usually stay with it for the long term. Daniela Bergdolt of the German Association for the Protection of Securities Ownership therefore believes that large asset managers may not be bad in themselves. Especially with regard to pensions, Germany needs a different view on stocks, the shareholder lawyer said. “We have to get rid of the idea that the shareholder is considered a gambler, he is not. He invests in our economy. And that is something completely different.”

The number of shareholders in Germany has recently increased. During the Corona pandemic, more and more young people are focusing on their investments. According to the German Stock Institute, there were almost 13 million share savers in Germany in 2022 – more than ever before.

However, German Equity Institute Executive Director Christine Bortenlänger sees numerous obstacles that make it difficult to buy and hold stocks. “In Germany, we have a problem that the state does not support the use of shares in statutory pensions, but also in private pension systems. Insurance companies are prevented from investing in shares on a large scale. There are little or no tax incentives, the share is even disadvantaged.” In the planned””Generation Capital” from the federal government – whose initial funding was canceled by a traffic light due to the budget crisis – Bortenlänger sees a first step in the right direction.

Growing interest of foreign state investment funds

If you look at the ownership structure of the 40 DAX companies, you will notice that foreign sovereign wealth funds have increasingly invested. They are among the so-called anchor investors who have a significant stake in the company. In addition to the Norwegian sovereign fund, they come from countries such as Qatar, the United Arab Emirates and China.

From a certain share size of at least three percent, the shares must be reported to the financial regulator. With the size of their investment, the investor can also expand their influence on the company. Some people view foreign influence on German companies with skepticism and may even fear a hostile takeover. Shareholder lawyer Daniela Bergdolt is different: In her view, sovereign wealth funds are “usually reliable investors with a long-term interest in the company”.

DAX needs foreign investors, Bergdolt said. “If we didn’t have international investors, we would have to worry because then our companies would not be attractive.”

Bianca von der Au, HR, tagesschau, 20 December 2023 17:46

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