Prepared for growth. In 2003, the Asset Management Business Division (AM) concentrated on improving its client service, enhancing its product range and stepping up investment performance.
Our subsidiary DWS, the European market leader in retail asset management, was named best large mutual fund company in Germany for the ninth consecutive year by Standard & Poor’s. We attained strong inflows, particularly in the second half of the year. DWS remained the dominant force in Germany with a 25% market share and continued to grow in Italy, Spain and the United Kingdom. A series of distribution agreements with major banks across Europe contributed to the growing sales of DWS funds.
Scudder Investments was a major contributor to the successful development of the asset management business in the Americas in 2003. As a result of focusing on distribution in the advisor-sold channel, Scudder enjoyed strong sales growth in 2003. According to the Investment Company Institute (ICI), our long-term new sales increased 14% from U.S.$ 5.6 billion in 2002 to U.S.$ 6.4 billion in 2003. According to Strategic Insight, we also improved our long-term net flow ranking among the largest 40 firms in the channel from 32nd at year-end 2002 to 23rd at year-end 2003. In industry surveys our Customer Contact Service Center received praises.
Our institutional asset management in the U.S.A. continued to meet our clients’ investment objectives with innovative products. We offer a broad range of investments in equity, fixed income, cash and alternative investments such as hedge funds, private equity and real estate. We serve a variety of clients, including corporations, financial institutions, pension funds and non-profit-making organizations. We were the largest third-party manager of insurance company assets in the United States.
In Asia/Pacific, we reduced costs through outsourcing initiatives and headcount adjustments, and registered a number of important new client wins. Successful product launches boosted the growth in retail market momentum. We started a new asset management business in India and during the year launched seven domestic funds in which investors placed more than € 400 million at December 31, 2003. This made us the second fastest growing asset management company in India.
Successful hedge funds. DB Absolute Return Strategies (DB ARS), our global hedge fund management business, saw significant growth in 2003 from both client capital raising and strong fund performance. DB ARS ranks as one of the top 20 fund of hedge fund businesses with over U.S.$ 4.7 billion in assets. The number of client accounts across the U.S.A., Europe and Asia grew significantly, raising net assets of U.S.$ 1.6 billion for the year. Total assets under management by Deutsche Bank at the end of 2003 exceeded U.S.$ 8.5 billion, of which U.S.$ 3.8 billion were in single-manager hedge funds, investing directly in securities and financial instruments.
Expanding real estate investment business. Our Real Estate business ended 2003 with € 46.6 billion under management. We launched a Japan-domiciled retail fund investing in U.S. REITs through RREEF Securities. In Australia, a feeder fund invested in RREEF’s America II and Securities funds.
In all, our U.S. real estate investment company RREEF captured 52 new institutional clients and increased its assets under management to U.S.$ 21 billion. The German grundbesitz-invest fund invested in office buildings in Tokyo and Los Angeles using our qualified local representatives’ market expertise.
In December 2003, we placed a Global Real Estate Opportunities Fund in a volume of U.S.$ 1.2 billion with institutional investors and high net worth private clients. This is one of the largest global funds of its kind ever launched and underlines our product expertise and placing power in this area.