According to insiders, the US Securities and Exchange Commission is examining whether the asset manager has been too lax with criteria for sustainable investments.
(Photo: Reuters)
Frankfurt The Deutsche Bank subsidiary DWS reports strong business figures regardless of the allegations of excessive sustainability investments. Adjusted pre-tax profit rose in the third quarter compared to the same quarter of the previous year by 26 percent to a record high of 271 million euros.
After taxes, the group result increased by a good fifth to 182 million euros. The income climbed thanks to high fee income by almost 19 percent to 664 million euros, as the DWS reports. The fund house raised twelve billion euros in fresh capital in the third quarter. The outlook for the full year 2021 remained unchanged.
“Record management fees have raised adjusted pre-tax profits to a record high,” said DWS CFO Claire Peel. In addition to higher managed assets, she cites a larger contribution from the stake in the Chinese fund house Harvest as the reason.
For the first nine months of 2021, adjusted pre-tax profit improved by 31 percent year-on-year to EUR 766 million. The group result rose by almost a third to 522 million euros.
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The basis for the good figures were capital inflows from investors into index funds of 6.6 billion euros net – into actively managed funds and money market funds of almost four billion euros and alternative investments of 1.4 billion euros.
However, investors withdrew net capital from actively managed equity funds. The much discussed sustainably managed funds raised five billion euros in the third quarter, according to the DWS it was four billion a quarter earlier.
Competitors recently raised more capital from private investors
However, when it comes to mutual securities funds, which are primarily launched for private investors, DWS is lagging behind the other three major German competitors, as the fund analysis company Morningstar has found. Accordingly, DWS collected a net 1.5 billion euros in this fund in the third quarter. The competitors Allianz Global Investors, Deka and Union Investment received more than three times as much.
For the first nine months, DWS reports capital inflows of 32.6 billion euros. The managed assets of DWS climbed in the past three months thanks to the inflows and price gains in securities by 21 billion euros to 880 billion euros.
DWS boss Asoka Wöhrmann emphasized that his company had achieved records in terms of net inflows, efficiency and profitability in the year to date thanks to the “close relationships with our customers in markets around the world”. After only nine months, DWS achieved its medium-term target for net funds of three to five percent of assets for 2021.
The adjusted costs rose compared to the same quarter of the previous year by almost 15 percent to 393 million euros. According to Peel, this reflects investments in growth projects. In the first nine months of the year, the adjusted costs increased year-on-year by ten percent to 1.16 billion euros. This is particularly due to higher personnel costs as well as service and fee costs.
The adjusted cost / income ratio (CIR) fell in the third quarter by 2.2 percentage points year-on-year to a record low of 59.2 percent. The management fee margin fell further in the third quarter, however, also as a result of the boom in the low-cost ETF index funds, to 27.6 percent after 28.1 percent in the previous quarter
The focus is on the greenwashing allegations
However, the focus is currently on the DWS with a different, far more unpleasant topic, which is why Wöhrmann is considered ailing. The Deutsche Bank subsidiary DWS is currently having to put up with investigations by the financial regulators in the USA and Germany.
The former DWS sustainability boss Desiree Fixler accuses the fund house of doing so-called greenwashing, i.e. of exaggerating the information on their sustainable investments. The DWS rejects the allegations. The DWS share has slipped by up to 15 percent since the allegations were made at the end of August. Woehrmann is said to have hired Fixler.
More: DWS starts a detailed examination of the greenwashing allegations