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German equities in focus: opportunities and strategies for investors
Date:
02. July 2025
Despite years of headwinds for value investing, Frankfurt Performance Management AG (FPM) has achieved consistently strong returns with its investment strategy. As of the end of May, the funds' performance of 27 per cent has once again outperformed the DAX, which has posted a year-to-date return of 20 per cent. These outstanding results have also been recognised
through several recent awards: both Stockpicker Funds received four stars from Morningstar for the Retail and Institutional tranches respectively. Additionally, the Stockpicker Germany Small/Mid Cap fund was honoured with the German Fund Award and the Lipper Award in the ‘Three Years’ and ‘Five Years’ categories.
ChampionsNews: Mr Wirth, given the strong performance of the FPM Funds Stockpicker Germany since the beginning of the year, which stocks have performed particularly well?
Martin Wirth: First and foremost, banks and insurance companies. While banks can now finally earn their cost of capital again in a normalising interest rate environment, the portfolio also includes a broad selection of classic value stocks, such as K+S, Heidelberger Druck, Fresenius, and the listed United Internet companies, which were trading at strikingly low valuations at the end of 2024.
Rheinmetall also continues to stand out. Although its valuation no longer meets classic value criteria, the share is benefiting considerably from what we call a 'Sputnik moment' - an event that alarmed Europe and exposed weaknesses in its defence capabilities. Only a handful of companies are positioned to efficiently and quickly improve this situation. Therefore, Rheinmetall shares should not be assessed purely on current valuation metrics, but also taking into account the numerous strategic options likely to emerge for the company in the coming years.
Beyond this, many stocks remain attractively undervalued, which creates opportunities — especially if the economy picks up again. For all successful holdings, it was not low valuation alone that made the difference, but rather a clear improvement in fundamentals. Valuation was merely the basic prerequisite for positive development.
Mr Hoffmann, you have a successful track record of investing in German equities with a value-driven strategy, particularly in the small and mid-cap segments. What themes are currently top of mind, and which stocks do you believe deserve special attention?
Raik Hoffmann: Despite ongoing geopolitical uncertainty we see a number of promising tailwinds. The new German government is pledging tax relief and a reduction in bureaucracy, and the recently passed investment programme is expected to result in substantial investment. The capital mobilised as a result is already attracting institutional investors, which could increasingly steer capital flows more favourably toward Europe and Germany.
With a focus on companies that continue to trade at deeply discounted valuations, I have selectively built up or expanded positions in Douglas, Grenke, Jungheinrich, Norma and Sixt over recent months. An economic recovery in Europe, triggered by the German economic stimulus package, would provide these companies with an additional tailwind. Although the upcoming quarterly figures are likely to be marked by cautious guidance and somewhat modest earnings, the stock market tends to be forward-looking and quick to reward sound management decisions.
Why is now a good time for investors to consider your funds?
Martin Wirth: Fundamentally, available capital should always be invested, since cash loses value in the long term. And for good reason. Companies generate profits daily, making them more valuable over time.
German equities offer attractive valuations in many cases, even if not universally. Taking a long-term perspective therefore creates opportunities. On the other hand, those who attempt to time the market risk misjudging it — as illustrated by the numerous daily news items that were quickly forgotten, as was recently the case around Liberation Day. For all these reasons, we believe now is an excellent time to invest in our funds.
How can investors invest capital with you?
Raik Hoffmann: As well as our mutual funds - the FPM Funds Stockpicker Germany All Cap and the FPM Funds Stockpicker Germany Small/Mid Cap - both of which are available in institutional share classes, we also offer our equity strategies through special funds and bespoke mandates. This enables us to serve both private and institutional investors. We are always open to discussion and offer a direct and uncomplicated dialogue with Martin Wirth and myself.
More information on the FPM Funds Stockpicker Germany:
FPM Funds Stockpicker Germany All CapISIN: LU0124167924 (Anteilklasse C) / LU0850380873 (Anteilklasse I)
FPM Funds Stockpicker Germany Small/Mid Cap
ISIN: LU0207947044 (Anteilklasse C) / LU1011670111 (Anteilklasse I)
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The information presented in this publication is for your information only, is subject to change and does not constitute investment advice, legal and/or tax advice or any other recommendation. The statements contained in this document reflect the current views of Universal-Investment-Luxembourg S.A. ("UIL"), which are subject to change at any time without notice. All statements in this overview have been made with care according to the state of knowledge at the time of the preparation of the marketing document. However, no guarantee or liability can be assumed for its accuracy or completeness. Information on how wehandle complaints can be found at https://www.universal-investment.com/-/media/Compliance/PDF/Luxembourg-English/Complaint-Handling-Policy_UIL_EN_02-2022.pdf.
In addition, we would like to point out that UIL, as management company, may dhas made arrangements for the distribution of fund units in EU Member States, UIL may denotify arrangements made for marketing as regards units or shares in accordance with Art. 93a of Directive 2011/61/EG and Directive 2019/1160/EU. In this context a blanket offer is made to repurchase or redeem all corresponding units held by investors in the relevant Member State.
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