The volume of absolute return and alternative Ucits funds approved for distribution in Germany increased by almost 6% to €276bn in the first half of 2018. Demand was primarily driven by institutional investors, who accounted for more than 70% of inflows. Global macro and market neutral equity strategies were particularly in demand. Overall, the fund universe became increasingly concentrated, with the top 5% (40 funds) managing 46% of total volume. The challenging market environment of rising returns and predominantly weaker equity markets is also being reflected in 2018 performance. Although the average return of all evaluated funds in the first six months of the year was just -0.36%, this meant that they outperformed hedge funds, European equities and corporate bonds. Long/short funds that primarily invest in the USA or worldwide achieved positive returns.

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