“We will not see a price fall”

Zero interest rates, climate crisis, tech revolution: the next decade will pose great challenges for the world. The head of the fund provider DWS explains what this means for your money – and what you should take care of now.

In the middle of the corona pandemic, Germany’s largest asset manager DWS, which invests around 750 billion euros for its customers, surprises with good business figures. Did the crisis have to come first for Germans to be interested in stocks?

For DWS boss Asoka Wöhrmann, it is more the lack of alternatives that drives savers to the financial markets. The times of good government provision and high savings rates are over, instead one has to be prepared for a decade of zero interest rates.

t-online spoke to Asoka Wöhrmann about how savers should deal with these prospects, what opportunities there are in sustainable investments and which corona policy would now be the best for the economy.

t-online: Mr Wöhrmann, in the video link with Chancellor Angela Merkel, the Prime Ministers are expected to decide on a “lockdown light” today. Will the markets collapse again, is this the double dip?

Asoka Woehrmann: I expect the lockdown light to cool the markets for a short time. However, we will not see a dramatic fall in prices like in March with the first corona shock. What we experienced back then has never happened to me in my 22-year career. That applies to the collapse, but also to the incredibly rapid recovery of the markets. Today we can all – the players in the financial markets, but also society as a whole – deal with the situation much better.

That sounds almost optimistic.

I would rather say realistic. My impression is that the economy has got used to the Corona year. But one thing is also clear: With the new measures, with a second lockdown, we have to say goodbye to the illusion that we can leave the corona crisis behind us within six months. The hope for a quick vaccine does not work. We lied to ourselves to a certain extent. We now know that the crisis will stay with us until at least the middle of next year, possibly until autumn 2021.

Asoka Woehrmann:Asoka Wöhrmann: “The point now is that we return to discipline.” (Source: DWS)

Against this background, how do you rate the current corona policy in Germany?

Chancellor Angela Merkel and the other responsible persons reacted very well in March. You made sure that everyone saw the seriousness of the situation. It was an incredible balancing act between deprivation of liberty rights and health protection. I am firmly convinced that the measures taken have saved tens of thousands of lives in Germany. This is an enormous achievement that we rarely talk about in Germany – but one that earns us a lot of respect abroad. I notice that in many meetings with investors.

With a look at the number of infected people, this success is now crumbling. Why?

Because we’ve all become too careless.

And what has to happen so that people – also in terms of the economy – come back to reason?

The point now is to get back to discipline. Measures that appear exaggerated may also be needed so that the population understands how serious the situation is again. I’m not saying schools should be closed. On the contrary, you should weigh that up very carefully and only do it in extreme cases. But it looks different with the restaurants. Restrictions would be right here in order to prevent a complete shutdown of the entire economy. But in return, the right aid programs for gastronomy, tourism, art and culture are needed so that large parts of social life are not sustainably damaged.

As DWS, you just have surprisingly good quarterly figures presented. How is it that your company is doing so well during the crisis?

The numbers from the third quarter are actually very encouraging. But we also worked hard for eight quarters in a row. Exactly two years ago when I started as CEO of DWS, stormy times lay ahead of us. In 2019 alone it was very difficult to assert oneself well in the markets. We managed to do this while at the same time working hard on our costs. It is now paying off.

The stock expert
Asoka Wöhrmann, born in 1965, has been the head of DWS, Germany’s largest asset manager and fund provider for private investors, since the end of October 2018. At the age of eleven he came to Germany from Sri Lanka as an adopted son, did his doctorate in economics and worked his way up to chief investment strategist at DWS since 1998. He is considered one of the most important advocates of a strong equity culture in Germany. Most recently, he headed Deutsche Bank’s German private customer business for three years.

So you’ve been saving on your managers’ salaries?

Our cost base is of course much more complex, but to answer your question: Above all, I have carried out a major restructuring of the workforce so that we have a good team at the top. This June I also reduced the size of the board from eight to six members. We have also sorted out a large number of managers one step below the executive board. For me, the individual payment itself depends solely on the performance.

Can your good results be explained by performance alone – or wasn’t it also a lot of luck?

Sure, happiness is always part of it. As my mother used to say, happiness is always with the able. It was not immediately foreseeable that the markets would recover so quickly shortly after the slump in March – state aid for companies or not. We have been very busy in the past few months and have worked hard. In times of crisis in particular, many of our customers have even greater investment needs than usual.

It is also noticeable that you have significantly increased the net inflows for your funds. Does that mean that German money is not as stupid as it is claimed – did the Germans invest at the right time during the crisis?

I can really no longer hear this saying of the so-called “Stupid German Money”. The Germans are not stupid and the savings stocking has nothing to do with stupidity. For decades in Germany we had hardly any incentives to put money into riskier forms of investment, because the state supply was sufficient – and because the interest rates on savings were high enough, certainly not negative. Both are now changing massively.

Asoka Woehrmann:Asoka Wöhrmann: “We are at the beginning of the decade of zero interest rates.” (Source: DWS)

Tomorrow the ECB will decide on the key interest rate – an increase is not expected. Will we ever see higher interest rates again?

That’s exactly the point. We all look to the ECB, but what should we expect big? We must finally be clear: we are at the beginning of the decade of zero interest rates. And that’s nicely put. At first we will even become one negative interest rate phase experience that only later turns into a zero interest rate phase.

What does that mean for savers?

Zero interest rates are dramatic for all of us. Now you have to think carefully about how you invest your money – down to the last euro. A great way is a long term stock savings plan. Just take a look at the German share index: a decade ago the Dax was below 5,000 points. In the medium term, 20,000 points are now possible. In the past, German stocks have experienced an average annual performance of more than 7 percent.

The Germans seem to be of little interest. Hundreds of thousands still have your money in their savings account. What has to happen for them to finally throw it away?

Germans have a great savings culture. But after that, they should start investing. My most important tip is: don’t leave your money in your savings account!


Start with stock savings plans, invest in long term Mixed funds. With a savings plan that you pay into monthly, you don’t have to worry about market fluctuations.

Are there any special trends that promise great returns?

Sustainable investments can be worthwhile. We are currently experiencing a gigantic boom. I would rely on that and even cut back on other areas, such as the short-term availability of money.

Sustainability is a good keyword. When does DWS stop investing in oil companies such as Exxon-Mobil or BP with its actively managed funds?

DWS has been offering sustainable funds for more than 25 years, but we often did not stick to it consistently. As a chief investment strategist, I hesitated for a long time to recommend sustainable investments – simply because the traditional funds were even better at the time. But that has shifted for a few years. The next decade is also the decade of sustainability.

Again: when do you consistently exclude oil companies from their funds?

That cannot be said in general terms. The world won’t get any better if we stop investing in oil companies. Instead, we have to use our position as the largest German asset manager and influence companies so that they change and use clean technologies, for example.

What does that mean in concrete terms?

That means that we exclude individual companies that ignore the climate crisis, but not entire sectors or industries. We are working on a rating from A for particularly exemplary to F for candidate for exclusion. We primarily look at climate risks, but also at whether a company violates human rights or, for example, benefits from child labor.

Fund for Germany
The German Society for Securities Savings (DWS) was founded in Hamburg in 1956 and, with more than 200 actively managed equity, mixed and pension funds, is the largest fund company in Germany in terms of investment amount. Since 2007, DWS has also been issuing passive index funds, or ETFs for short, under the Xtrackers brand. After DWS was a subsidiary of Deutsche Bank until 2018, it is now an independent, listed company. Overall, the more than 3,000 DWS employees manage around 750 billion euros in deposits from their customers worldwide.

When does the rating come?

We have already started the implementation. We also started converting the fund prospectuses a few months ago. So we are now gradually applying the ratings – and then with full force next year. Anyone who does not show understanding is excluded.

For example, who does it hit?

I cannot and will not say that publicly, not today. But we are already holding talks. We no longer invest in incorrigible companies.

Are all of your investment products subject to this check?

We expect that we will convert 60 to 70 percent of our assets over time. The exception are exchange-traded index funds, which, for example, track a stock index such as the S&P 500. Incidentally, over a third of our new systems already meet the criteria for sustainable investments – because that’s what customers want. That is incredibly encouraging and gives me the freedom to continue aligning DWS with sustainability.

Let’s talk about old age: You once said that the fund industry should be more concerned with the impending old-age poverty in Germany. What do you mean? What does DWS do to ensure that pensioners do not have to go into poverty?

Germany has a unique state pension system. Even so, many people will not get a lot of money in old age. That is why we have to create a second and a third pillar for old-age provision in addition to state benefits. The second mainstay is: investing money. Because of the zero interest rates, contribution guarantees are no longer possible for products such as the Riester pension. We have to say goodbye to the thought. It is no longer possible without shares.

And the third pillar?

As a third pillar, Germans should invest more in home ownership. And I say that, although it doesn’t exactly pay off for us as asset managers. But with this triad, state pension, private investment and property, you are well positioned.

What should the state do to promote the stock culture?

First of all, it is about education: the state should provide more financial education. It already starts in schools. Then Federal Finance Minister Olaf Scholz should lower the hurdles for buying shares – not raise them. A larger tax exemption for investment income would be a good step here. And then we need more transparency about the pension gap. We often know a lot more about our cars than we do about our pensions. That needs to change. We have the culture of savings. Now we have to add a stock culture to it.

Asoka Woehrmann:Asoka Wöhrmann: “Whether Joe Biden or Donald Trump wins the US election does not matter from the point of view of the market.” (Source: DWS)

A popular product to close the pension gap are ETFs, i.e. listed index funds that are also comparatively cheap. Do actively managed funds still have a chance against ETFs?

Active funds have performed well for decades. Now the ETF market is growing, we are not ignoring the topic. On the contrary. We ourselves are Germany’s leading ETF producer and in second place in Europe. Index funds are always very good if you have professional knowledge. The simple saver should, however, seek good advice. He shouldn’t be on autopilot.

With this you contradict the consumer advice centers, which recommend ETFs especially for beginners.

An ETF is better than a single stock. At Wirecard we saw what can happen if you only put your money on one card. The Dax ETF lost around 2 percent due to Wirecard, the Wirecard share itself almost 100 percent. In that sense, ETFs are very good. Even so, with ETFs you need to know which segments you want to invest in. For many of our customers, advice is therefore right and important.

But an ETF that tracks the broadly diversified international MSCI World index works like an autopilot for most people. You don’t have to get advice for that, do you?

I don’t want to contradict that. With a very broadly diversified ETF, you lower your risk. But the structural breaks in the world are dramatic: zero interest rates, technological change, sustainability. The stock markets have been buoyed by ten large technology stocks in the past six months. You can focus on this topic with active systems. But that doesn’t mean that I just advise it. Even a broadly diversified ETF is much better than doing nothing.

So you assume that tech stocks like Google or Amazon will continue to rise as strongly as they did recently?

Yes, tech stocks will continue to go up. However, if you want to get started now, you should be patient and wait for short-term setbacks. In general, however, I do not recommend individual shares. A whole basket of stocks from this industry, thematic funds or ETFs is better.

The US election next week should also be decisive for the markets. Who would be better for the courses: Donald Trump or Joe Biden?

From the point of view of the market, that doesn’t matter. Either way, there is likely to be a slight short-term setback to stock prices. After that, however, I expect the markets to recover quickly. Most likely Biden’s victory today, all signs speak for it. Almost 70 million votes have already been cast, including an overwhelming number of young electoral groups, with a large majority belonging to the democratic camp.

In the end it was often said that Biden was the greater stock market horror. How do you see it

Even if it is always said that an election of Biden, unlike Trump, would have more negative effects, that need not be true. With him there will be a gigantic economic stimulus program for the USA. It should not be forgotten that Biden was Vice President under Obama and thus part of the US administration that overcame the 2008 financial crisis superbly. In addition, Biden will ease the tension on the fronts of trade wars – both with Europe and China.

One last look into the crystal ball: Where will the Dax be at the end of the year?

We’ll be around 13,000 points. After the US election we will first tumble down, but then things will go up.

Thank you for the interview, Mr. Wöhrmann.


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