DWS Group GmbH & Co. KGaA ETR: DWS executives highlighted solid first-quarter results and tighter cost expectations for 2026 while acknowledging a “complex, volatile, and to a certain extent, unpredictable” backdrop that weighed on client activity late in the quarter.
Q1 results: higher revenue and profit, improved cost-income ratio
CEO Stefan Hoops said the market environment has increased the relevance of active management and cost discipline, arguing that “the cost income ratio for an asset manager is similar to the leverage ratio for banks.” Against that backdrop, DWS posted earnings per share of €1.32, which Hoops said was above consensus and “largely driven by the timing of our PIF II performance fees.”
CFO Markus Kobler reported total revenues of €821 million, up 9% year-over-year and down 9% quarter-over-quarter. Costs totaled €444 million, down 5% year-over-year and 9% sequentially, resulting in a reported cost-income ratio of 54.1%. Net income rose 33% year-over-year to €265 million (down 10% versus the prior quarter), which Kobler attributed to “strong operating leverage.”
Total assets under management were €1,093 billion, up 8% year-over-year and flat from the prior quarter.
Flows: strong retail momentum, institutional outflows amid March uncertainty
Kobler said DWS entered the quarter with “healthy flow momentum during January and February,” but activity slowed in March following geopolitical developments, with clients “cautious with the focus on liquidity and defensive positioning.”
- Total net flows: €11.0 billion
- Long-term net flows: €6.6 billion
- Retail net flows: €12.9 billion (13th consecutive quarter of positive flows)
- Institutional net flows: -€1.9 billion
By region, DWS recorded outflows of €5.1 billion in the Americas, which Kobler said were “mainly impacted by institutional cash outflows at the end of March” driven by seasonal tax payment effects. He added the company was “already” seeing a reversal in April. Germany delivered €7.9 billion of net inflows, “driven by an ongoing demand for passive, including Xtrackers,” while EMEA excluding Germany saw €7.7 billion and APAC posted €0.5 billion.
Business update: active, passives, and alternatives
DWS’s active AUM was €458 billion, broadly stable quarter-over-quarter. Within active, equity saw €1.2 billion of net outflows, which Kobler linked to “client de-risking in response to heightened market volatility.” Multi-asset recorded €0.3 billion of net inflows, including continued demand for flagship fund Concept Kaldemorgen. Systematic QI (SQI) posted €1.6 billion of net inflows, driven by white-label partnerships and quantitative strategies, including “a significant mandate in the Middle East region.” Fixed income was affected by specific institutional mandate losses in the U.S. and APAC, while retail demand was positive, particularly for “DWS Floating Rate Notes,” Kobler said.
In passive, Kobler said Xtrackers delivered net flows of €6.5 billion—the 13th consecutive quarter of positive flows—though momentum weakened in March. UCITS contributed €3.8 billion of net inflows, with clients rotating away from traditional benchmarks “heavily skewed towards the so-called Magnificent Seven,” supporting demand for equal-weight and “World ex US” exposures. Mandates and solutions added €2.9 billion. U.S.-domiciled ETFs posted -€0.2 billion, “mainly driven by outflows in high-yield ETFs.” DWS also referenced the launch of the “Xtrackers Europe Defence Technologies ETF” and two new digital distribution partnerships in EMEA.
Alternatives AUM was €112 billion, up 4% quarter-over-quarter, with net flows of €0.2 billion. Infrastructure contributed €0.1 billion of net inflows but was affected by a capital repayment to investors related to two PIF II asset sales. Kobler said DWS expects “another capital return to PIF investors of around €1 billion” in Q2, which will be recorded as outflows. Liquid real assets recorded €0.6 billion of inflows, while real estate saw €0.6 billion of net outflows; private credit remained a “strategic growth priority,” with marketing initiatives progressing, Kobler said.
Performance fees and PIF update
Management fees were €673 million, stable sequentially. Performance and transaction fees totaled €109 million, including what Kobler described as a “substantial performance fee contribution from our PIF II fund” due to asset sales in Q1. He added DWS does not anticipate further PIF II asset sales before the fourth quarter of 2026, and reiterated confidence that performance fees will come in at the upper end of the company’s 4% to 8% of revenue guidance range, with “the vast majority of remaining performance fees to be booked in Q4 2026.”
During Q&A, Hoops said “everything but one asset is sold” in PIF II, and suggested the remaining asset could generate roughly “€30 million-€40 million” of additional performance fees depending on price, with timing “likely” in Q4. He also said DWS returned “half a billion” euros of capital to PIF II investors in Q1 and expects about €900 million to be returned in Q2.
On PIF III, Hoops said he would not expect performance fees in 2026 or 2027, “maybe at the tail end of 2027,” but more likely “2028 business” due to timing. He described headline targeted returns as “low teens,” around “12%, 13%,” while aiming to outperform. For PIF IV, he said the target size remains “€4 billion plus,” with “a couple hundred million” euros raised in Q1 and the “lion’s share” expected in Q2 and potentially Q3, with the increase from €2.5 billion at the end of 2025 expected to be booked in calendar year 2026.
Guidance and strategy: tighter cost outlook, reaffirmed EPS growth target
Hoops said March and April volatility created an “AUM dent” of about €40 billion, which he said translates into a “revenue gap” of around €20 million. DWS, however, tightened its annual cost guidance to around €1.80 billion, which Hoops said would help offset the revenue impact. The company reaffirmed its target of 10% to 15% EPS growth for the full year, “assuming markets remain constructive.”
Executives also discussed strategic priorities, including an agreement with Nippon Life India Asset Management to invest in its alternatives platform via a 40% stake. Hoops said the acquired platform has roughly “€1 billion of AUM,” is profitable, and described the purchase price as a “reasonably high € double-digit million amount,” while noting no specific amount was disclosed. He said contributions would likely begin in 2027 rather than 2026. Hoops also cited progress on digital initiatives, including AllUnity issuing a Swiss franc stablecoin, and described regulatory clarity in Germany after the Bundestag approved a private pension reform, which he said could support higher-yielding products relative to prior capital-protected structures.
On distribution, Hoops said DWS intends to expand collaboration with Deutsche Bank’s Private Bank into discretionary portfolio management, though he cautioned it was “difficult to break down” the pace and economics and said more KPIs and guidance would follow once implementation details are worked through.
About DWS Group GmbH & Co. KGaA ETR: DWS
DWS Group GmbH & Co KGaA offers asset management services in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company's products and solutions cover equities, fixed income, cash, real estate, infrastructure, and private equity, as well as a range of sustainable investments. Within private equity, the firm specializes in co-investment, emerging markets, small and medium-sized companies, direct buyout, secondaries PE markets and structured capital solutions to private equity firms.
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