Assets under management at Deutsche Asset Management fell 1.7% for the quarter, and 1.1% for the full years ended June 30 to €711 billion ($811.2 billion), despite net inflows.
Total net inflows for the three months ended June 30 were €6 billion, up from €5 billion the previous quarter, and a turnaround compared to €9 billion of net outflows for the quarter ended June 30, 2016.
A financial update by parent group Deutsche Bank said net inflows for the quarter were driven by passive and active assets, especially in Germany where net inflows totaled €9 billion. This was partially offset by net outflows in the Americas of €4 billion, mostly from liquidity strategies.
Regarding the quarterly drop in assets, the update said the decrease was driven by "unfavorable foreign currency movements of €20 billion, partly offset by net asset inflows of €6 billion and favorable market development of €4 billion."
Institutional assets totaled €391 billion, down 1.3% over the quarter, and down 4.2% over the year. However, the institutional business recorded net inflows, of €2 billion for the three months ended June 30. That compared with €2 billion in net inflows for the previous quarter, and €1 billion in net outflows for the three months ended June 30, 2016.
"We continue to view longer-term industry growth trends favoring our capabilities in beta products, alternative investments and active multiasset solutions, areas where we believe we can grow market share both in our home market and abroad," said the update. "With the net new asset growth reported in the first six months of 2017 and clarity around not only the future structure of Deutsche AM, but also the improved capital outlook for Deutsche Bank Group, we see client confidence increasing and are cautiously optimistic about asset development for the remainder of 2017."
Over the medium term, the firm expects industry assets to grow, "albeit at a lower organic rate than in prior years, and profit pools to be challenged by fee compression, rising costs of regulation and competitive dynamics. In the face of this challenge, we intend to balance growth through product and coverage expansion with initiatives to ensure an efficient cost base and operating platform," said the update.
In March, the group announced a partial initial public offering within the next 24 months for Deutsche Asset Management.