Recently, new data was released on the participation of the German population in the economy through stock and equity fund ownership. In January, the German Stock Institute (Deutsches Aktieninstitut) reported on the prevalence of equity and equity fund investments in Germany. The figures reveal that the number of stock and equity fund investors has remained stable at around 12 million for years. Bull markets typically drive greater public participation in the stock market, whereas bear markets lead to a retreat. Compared to other industrialized nations, Germany remains at the lower end of the scale when it comes to stock market participation. Given the country’s growing population, the stagnation around 12 million investors suggests a declining interest in equities.
The key reason for higher equity market engagement in other countries lies in their pension systems. In many nations, capital-funded pension schemes play a crucial role in overall retirement planning. In contrast, Germany has made little progress in this area over the past 50 years. The current government coalition recently failed in its attempt to take an initial step toward capital-funded pensions through stock-based investments. Earlier efforts, such as the Riester and Rürup pensions, also fell short due to poor structuring.
As a result, private individuals must take responsibility for their own retirement planning through stock investments. The 12 million Germans who have done so have generally fared well over the years, despite market fluctuations. Unfortunately, the state discourages higher returns by taxing distributed corporate profits at nearly 50%, while also imposing the unpopular solidarity surcharge on capital gains. Additionally, investors cannot offset occasional capital losses against other types of income, making it even harder for those taking personal responsibility for their financial future. It is highly doubtful that a new government will adopt a more investor-friendly approach in this area. Recently, a company delisted from the stock exchange, citing the blunt assessment that "Germany is not a stock market country." While this statement may hold some truth, the stock market still offers individuals attractive opportunities for long-term wealth building.
LOYS equity funds also started the year on a strong note. Once again, Vates Aktien USA took center stage, seamlessly continuing its impressive performance from the previous year. Meanwhile, LOYS Premium Deutschland maintained its strong momentum from 2024, and LOYS Philosophie Bruns delivered similarly solid results.
Sincerely yours,
Fund managers and co-investors
Dr. Christoph Bruns Ufuk Boydak
Chicago, Frankfurt a.M. on January 31, 2025