Pension funds remain the largest investor group in Germany’s Spezialfonds, holding €784bn in assets, as the country’s investment fund industry reached €4.63trn by mid-2025, according to figures from the German investment funds association, BVI.

The data showed that institutional Spezialfonds continued to dominate the market, managing €2.21trn in total, with insurers also contributing significantly at €530bn.

Retail funds followed with €1.70trn, while discretionary mandates and closed-ended funds accounted for €652bn and €63bn respectively.

The industry has grown substantially over the past five years, rising from €3.34trn in mid-2020, equivalent to an average annual increase of around 7 per cent.

Meanwhile, retail funds attracted €47.8bn in net inflows during the first half of 2025, with bond funds leading demand at €22.7bn.

Equity funds brought in €19.6bn, almost entirely via exchange-traded funds (ETFs), while money market and balanced funds added €5.7bn and €2.7bn respectively.

Property funds, by contrast, saw outflows of €3.7bn, reducing total assets from €122bn to €118bn.

Indeed, equity ETFs have now become the largest category of retail funds, holding €825bn in assets, ahead of balanced funds at €366bn and bond funds at €286bn.

Germany remains Europe’s biggest ETF market, with BVI reporting €423bn in ETF assets via Clearstream, though overall holdings are estimated to exceed €600bn when including other depositories.

The trend reflects the growing role of ETFs in defined contribution (DC) schemes across Europe, where their low costs and transparency have made them increasingly popular investments.

Indeed, the majority (82 per cent) of institutional investors, including European pension schemes, think that ETFs are moving from short-term asset allocation strategies to core portfolio holdings.

In addition, BVI's data showed that closed-ended funds have also expanded in recent years, growing from €20bn in 2020 to €63bn by mid-2025.

Private equity accounted for nearly half of this total, while property funds’ share has declined from 50 per cent to 32 per cent.

Institutional investors dominated this segment, with Spezialfonds managing €59bn compared to just €4bn in retail closed-ended funds.

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