DWS Group GmbH & Co. KGaA (ETR:DWS) reported record third-quarter net flows and assets under management, as growth in its Xtrackers exchange-traded fund platform and private-wealth business helped lift recurring management fees.
Total net flows reached €30.9 billion in the third quarter of 2026, including €16.6 billion in long-term net flows, Chief Executive Officer Stefan Hoops said on the company’s earnings call. Assets under management rose 16% year over year and 3% sequentially to €1.221 trillion.
Third-quarter revenue totaled €784 million, up 4% from a year earlier and 1% from the prior quarter. Management fees increased 14% year over year to €745 million and rose 5% sequentially. Profit before tax climbed 6% from the second quarter to €325 million, while earnings per share were €1.15. For the first nine months, EPS reached €3.66.
“Our record total net flows, growing management fees, and continued cost discipline demonstrate the strength and momentum of our core business,” Hoops said.
Costs Decline Sequentially as Management Fees Grow
Total costs were €459 million, down 2% from the second quarter but 6% higher than a year earlier. The cost-income ratio improved by 1.9 percentage points sequentially to 58.6%, while the ratio for the first nine months was 57.7%.
Chief Financial Officer Markus Kobler said the company continued to expect its full-year 2026 cost base to remain broadly in line with 2025. DWS also reiterated its target of a 55% to 57% cost-income ratio for 2026 and its longer-term goal of reducing the measure below 55% by 2027.
Net income was €230 million, up 5% year over year but down 3% sequentially because the second quarter included a positive one-off tax effect. Kobler said underlying operating performance improved as profit before tax increased.
Performance and transaction fees were €7 million in the quarter, reflecting lower real-estate transaction volumes and expected cyclicality. DWS maintained its forecast for 2026 performance fees at the upper end of its 4% to 8% guidance range, with a main fourth-quarter contribution expected from its Concept Kaldemorgen strategy. The strategy had accrued about €50 million in performance fees through the third quarter, according to Kobler.
Xtrackers Remains Main Growth Driver
Private Wealth generated €21.9 billion of net flows during the quarter, led by Xtrackers and growing digital distribution. Institutional clients added €8.9 billion, supported by insurance mandate wins and renewed fixed-income demand, partly offset by expected redemptions.
Xtrackers posted record net flows of €15.8 billion, raising its assets under management to €475 billion. European exchange-traded products accounted for €13 billion of flows, while U.S.-domiciled ETFs attracted €1.2 billion. DWS maintained its position as the third-largest provider in the European ETP market, with a 10.1% market share.
The company’s active ETF franchise remained comparatively small, with roughly €3 billion in assets under management and €2 billion in inflows. Hoops said DWS intends to expand the franchise but expects active ETFs to remain more of a niche market in Europe than in the U.S., where tax considerations have supported adoption.
Digital distribution partnerships increased to 46 across Europe, the Middle East and Africa. Kobler said the channel had become a meaningful contributor to flows and had a strong pipeline.
DWS also highlighted growth in cash solutions distributed through digital platforms. Hoops said structurally higher money-market balances could result as investors using brokers and platforms place cash in money-market funds rather than conventional bank deposits. He added that the business carries low fees, around 5 basis points, but is highly scalable.
Active and Alternatives Results Were Mixed
Active assets under management declined to €484 billion, primarily because of adverse fixed-income market movements. Multi-asset strategies generated €2 billion of net flows, while systematic and quantitative investments added €1.1 billion.
Fixed income recorded €3 billion of outflows, including €1 billion of anticipated redemptions. Excluding those redemptions, DWS said demand was positive, particularly in Private Wealth, where floating-rate notes attracted about €9 billion of inflows.
Active equities had €1 billion of outflows, as a specific institutional mandate redemption and moderate U.S. private-wealth outflows outweighed German retail inflows. Hoops said DWS expects the fourth-quarter equity flow picture to improve.
Alternatives assets under management were stable at €105 billion, with €0.8 billion of net flows. Infrastructure generated €1.3 billion of inflows, while real estate posted €0.4 billion of outflows, mainly from Grundbesitz funds. DWS introduced a temporary redemption restriction for Grundbesitz Europa, saying the measure was needed to support orderly portfolio management and safeguard investors’ interests.
Hoops said the company does not currently see a need to restrict redemptions in its other two open-ended real-estate funds, though it continues to monitor conditions. He described the current market as a buyer’s market, but said supply constraints and demand fundamentals still create investment opportunities for institutional investors.
Peakside Deal and Deutsche Bank Collaboration
DWS announced earlier in October that it would acquire Peakside Capital Advisors, a €1.7 billion real-estate manager specializing in value-add and opportunistic strategies in Germany and Central and Eastern Europe. The transaction is expected to close by year-end, subject to regulatory approvals.
Hoops said the acquisition would add capabilities that DWS could not build as quickly organically and would help the company pursue opportunities in selected real-estate markets. DWS also expects initial closings in the fourth quarter for two private-credit funds, including European Direct Lending Fund II and a growth-debt strategy developed with KfW for German mid-sized companies.
The company is also seeking deeper collaboration with parent Deutsche Bank across institutional client coverage, private markets, portfolio solutions and fiduciary overlay offerings. Hoops said the first private-markets fund closings expected in the fourth quarter would help broaden cooperation with Deutsche Bank’s investment bank.
On capital allocation, Hoops said DWS remains open to smaller capability-building acquisitions but has not identified a transformative transaction that would consume its excess capital. The company therefore remains committed to the possibility of an extraordinary dividend unless it identifies a better use for the capital in coming months.
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.
