Deutsche Bank's fund arm reduces the restrictions on defense assets, says CEO CEO

(Bloomberg) – The investment unit of Deutsche Bank AG removes restrictions that have prevented a number of its funds to hold defense assets, according to the CEO. The move, made possible by a recent adjustment in Germany’s investment guidelines, has the potential to free ‘hundreds of billions’ euros across the country’s asset management industry for defenses, said Stefan Hoops, CEO of DWS Group. This is part of a greater breakdown in the investment industry in Europe, as Fund managers from Scandinavia to France are looking for ways to support an industry whose geopolitical significance has risen in the face of war and ties with the US. The pivot also helped increase investment returns, with defense assets such as Germany’s Rheinmetall considering that doubled in value this year. Industry rules for funds that market themselves as ESG (environmental, social and management) used to exclude weapons manufacturers largely, but ‘that has now changed,’ Hoops said. This is also due to the financial performance of the defense sector, he said. Several industry standard institutions for the German asset management industry agreed late last year to change a rule known as the ESG target market concept, ie on Wednesday in a separate statement to Bloomberg News. The rule was developed in 2021, “when there were no standards for sustainable products in the EU,” the rule excluded many defense investments of ESG funds. The decision to change the guidelines applies to Germany, enabling the country’s asset managers to open ESG funds for defense investments. The release of funds ie is now adjusting the documentation of funds that its DWS Basic exclusion filter applies, according to the statement. The change, which comes into effect on May 21, will scrape a threshold that has prevented funds from holding companies that have received more than 10% of their income from defense activities. It will also be money for free to add shares of companies connected to nuclear weapons, ie said. The adjustments mean that 34 members of the MSCI World Index – which accounts for 2.26% of its weight – will be added to the universe of investment companies for DWS funds that were previously subject to defense restrictions, according to the statement. The asset manager’s controversial weapons policy, which excludes group munition and other weapons, still applies, it states. “The target market concept needs to change for the industry, then the prospectuses have to change, and then we can make the changes,” Hoops said in the interview, explaining how the changes come into effect. Catching expects that ie does not intend to put all the money unlocked by these adjustments in the defense, Hoops said. “But if the question is, what amount of funds can suddenly start investing, it is hundreds of billions of views that can then start investing in defense.” “There will definitely be a catch up,” Hoops said. “There is no doubt about it.” More stories like these are available on Bloomberg.com © 2025 Bloomberg LP first published: 23 Apr 2025, 09:31 pm Ist