Majority of the resources are disposed of during the initial six months.
Private investors have demonstrated a consistent pattern of net fund sales over the past decade, with the second quarter leading in fund sales, accounting for up to 50 percent of the total new business. This trend is evident in the analysis of around 180 sales-strong funds, representing nearly 90 percent of the cumulative fund sales to private households since 2011.
The first and third quarters each account for 20 to 35 percent of total fund sales, while the fourth quarter typically falls behind with less than 10 percent. This seasonal pattern remains consistent even in years where the stock markets gained in all quarters, such as 2013, 2017, and 2019 for the DAX.
Interestingly, private investors seem to be hardly influenced by current market trends when buying funds. Short-term market crashes have little impact on fund sales to private investors, as seen in years with intermediate crashes, such as the third quarter of 2015 or the beginning of 2020 during the corona crisis.
Markus Michel, who heads research at the German Investment Fund Association (BVI), has highlighted that these sales-controlling measures have resulted in a decrease in new business in real estate funds over the course of the year. However, he notes that seasonality in real estate funds is influenced by sales-controlling measures taken by providers due to high demand from savers and manageable investment opportunities.
At the beginning of the year, banks and savings banks send deposit overviews to their customers, and many advisors use this opportunity to review the composition of their customers' portfolios with them. Advisors often contact their customers about unusually high account balances on current accounts that frequently occur in the "less expenditure-heavy" first half of the year.
While direct seasonal data on net fund sales to private investors is sparse, related market seasonality affects investment flows. Banks and savings banks act as conduits and facilitators for investments, with their financial product offerings and deposit behaviors impacting fund flows indirectly. These institutions also offer flexible financing options that help businesses manage seasonal revenue fluctuations, which can influence when private investors deploy capital by smoothing out cash flow inconsistencies.
By managing payments, financing, and customer fund access, banks impact the timing and volume of net fund sales to private investors, particularly in markets where financial products and investor confidence tie closely to bank behavior. For instance, the pattern of fund sales remains consistent even in years where the stock markets gained in all quarters, such as 2013, 2017, and 2019 for the DAX.
Eurostat reports that private households' consumption expenditures are on average four percent lower in the first two quarters compared to the preceding fourth quarter, which could be a contributing factor to the higher fund sales in the first half of the year. However, more research is needed to fully understand the intricacies of the seasonal patterns in net fund sales to private investors.
private investors often allocate a portion of their finances towards investing in various business sectors, such as real estate or stocks, backed by insurance products; this seasonal pattern in fund sales, heavily influenced by bank behavior and households' consumption expenditures, shows a consistent trend over the past decade.
by managing payments and facilitating financing options, banks can indirectly impact the timing and volume of private investors' investments, including those in insurance and financial products, thereby shaping the rhythm of net fund sales across quarters.
