DWS Group GmbH & Co. KGaA Q2 Earnings Call Highlights

Key Points

• DWS reached record assets under management of €1.19 trillion after adding nearly €100 billion in the second quarter. Total net flows accelerated to €24.8 billion, led by private wealth, the Americas and Germany.
• Xtrackers and active investments drove growth, with passive products attracting €11.7 billion and active equity returning to positive flows. Alternatives reported €700 million of outflows, largely reflecting €1.3 billion in capital returned to investors after infrastructure asset realizations.
• Revenue rose 4% year over year to €773 million and net income increased 11% to €237 million, while DWS maintained its 2026 targets for 10%–15% EPS growth, flat costs and a 55%–57% cost-income ratio.

DWS Group GmbH & Co. KGaA ETR: DWS reported record assets under management and stronger client flows in the second quarter of 2026 after completing a broad front-office reorganization earlier in the year.

Chief Executive Officer Stefan Hoops said the company gained nearly €100 billion in assets under management during the quarter, reaching a record €1.19 trillion. He characterized the period as a reacceleration following changes to DWS’s organizational structure, including the creation of private wealth and institutional client segments, a consolidated investment leadership structure, and a combined strategy and M&A function.

“Long-term net flows were significantly higher quarter-on-quarter,” Hoops said, pointing to improved momentum in active equity, Xtrackers ETFs and infrastructure. He added that the quarter produced DWS’s highest level of net new revenues from client inflows since the company began tracking that measure, though DWS does not disclose the amount.

Flows Improve Across Client Segments and Regions

Chief Financial Officer Markus Kobler said total net flows reached €24.8 billion in the second quarter, including €11.6 billion of long-term net flows, representing a significant acceleration from the first quarter.

• Private wealth, formerly reported as retail, generated €18.9 billion of net flows, its strongest quarterly result since DWS’s IPO.
• Institutional clients contributed €5.9 billion, supported by selected mandate wins in APAC alternatives and U.S. cash-product flows.
• The Americas recorded €10.8 billion in net flows, Germany contributed €10.5 billion, EMEA excluding Germany added €3.2 billion, and APAC generated €3 billion.

In active investments, active equity returned to positive flows of €1.1 billion, supported by improved fund performance and demand for global equity products. Hoops said flagship products including Top Dividend and Akkumula generated more than €1 billion in combined net inflows. Systematic and quantitative investments, or SQI, also recorded €1.1 billion in net flows.

Fixed income saw €1.6 billion of outflows, mainly from planned client redemptions, while multi-asset flows were broadly flat. DWS said demand for its Concept Kaldemorgen fund and selected mandate wins were offset by two mandate losses.

Xtrackers Recovers, Alternatives Affected by Capital Returns

DWS’s passive business, including Xtrackers, generated €11.7 billion of net inflows and ended the quarter with €455 billion in assets under management, up 15% from the preceding quarter. UCITS ETFs accounted for €12.6 billion of inflows, largely into S&P 500 and MSCI World strategies, while U.S.-domiciled ETFs added €9 billion, supported by fixed-income ETF demand.

Mandates and solutions recorded €1.7 billion of outflows, primarily due to a redemption by a German corporate client. Kobler said the company’s European exchange-traded product market share increased to 10.2% as measures involving client engagement, product development and competitiveness gained traction.

Alternatives assets under management were €105 billion, down 6% from the first quarter. The business reported €700 million of net outflows, though management said this reflected €1.3 billion in capital returns following asset realizations in PIF I and PIF II infrastructure products. Excluding those returns, alternatives would have posted positive net flows, according to the company.

Infrastructure outflows totaled €400 million, while real estate had €300 million of outflows amid still-challenging conditions. DWS said transaction activity and fundraising discussions in real estate showed early signs of improvement. Several private-credit strategies are approaching initial closings within the next six months, management said.

Revenue Rises as Performance Fees Normalize

Second-quarter revenue was €773 million, up 4% from a year earlier but down 6% from the first quarter. Management fees rose 13% year over year to €709 million, driven by higher average assets under management. Performance and transaction fees were €11 million, substantially lower than the prior quarter, when DWS recognized €104 million of infrastructure-related performance fees.

Net income increased 11% year over year to €237 million, including a positive tax effect of €25 million. Earnings per share were €1.19 for the quarter and €2.51 for the first half. Hoops said first-half profit before tax rose 16% and first-half earnings per share increased 21%, calling it the company’s best first half.

Total costs were €468 million, up 6% year over year and 5% quarter over quarter, producing a 60.5% cost-income ratio. Kobler said approximately €30 million of costs were related to higher asset volumes and share-price-linked compensation. Of that amount, €16 million related to share-price compensation was hedged and reflected in other revenues, leaving no effect on pretax profit, though it affected the reported cost-income ratio.

DWS reaffirmed its expectation for flat costs and a 55% to 57% cost-income ratio in 2026, while Hoops reiterated the company’s goal of bringing the ratio below 55% by next year. The company continues to expect performance and transaction fees at the upper end of its 4% to 8% revenue guidance range for 2026, followed by the lower to middle portion of that range in 2027.

Pension Reform Seen as Long-Term Growth Opportunity

Management also highlighted Germany’s pension reforms as a potential structural growth driver. Hoops said the planned retirement savings account, known as the Altersvorsorgedepot, is scheduled to begin on Jan. 1, 2027. The product will include increased subsidies, tax benefits and eligibility for approximately 4 million self-employed individuals, while allowing products without capital guarantees.

DWS plans to offer retirement-saving products and said Deutsche Bank will be a key distribution partner. Hoops also identified opportunities in occupational pensions, where DWS already manages close to €100 billion in German institutional pension assets. He said DWS is developing scalable defined-contribution offerings for mid-sized companies and tailored solutions for large corporates.

For 2026, DWS maintained its target for annual earnings-per-share growth of 10% to 15% and said it remains focused on growth in active management, ETFs, alternatives and pension-related products.

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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