Featuring:
Hansjoerg Pack
Director and Senior Portfolio Manager of Equities
DWS
German equities have provided investors with strong recent performance. In this episode of CEF Insights, Hansjoerg Pack of DWS discusses the New Germany Fund (GF), explores shifting global market dynamics, and explains why fiscal policy, valuations, and earnings growth could favor German small- and mid-cap stocks in the years ahead.
The Germany Fund, New Germany Fund and Central Europe & Russia Fund are managed by the Deutsche Bank Group, one of the world's largest financial institutions. Learn more about the New Germany Fund (GF) here.
Transcript
CEFA:
Welcome to CEF Insights, your source for closed-end fund information and education, brought to you by the Closed-End Fund Association.
Today we are joined by Hansjoerg Pack, Director and Senior Portfolio Manager of Equities with DWS and Lead Portfolio Manager for the New Germany Fund, ticker symbol GF.
Hansjoerg, thank you for being with us today.
Hansjoerg Pack:
Thank you for having me.
CEFA:
Hansjoerg, I mentioned the New Germany Fund, a U.S.-listed closed-end fund you manage. Can you discuss the investment strategy as well as the objectives of the fund?
Hansjoerg Pack:
Sure. The fund seeks long-term capital appreciation, primarily through investments in middle-market German equities. which means that a large proportion, at least 80% of net assets, ought to be invested in equity or equity-linked securities of German companies. And the focus is clearly on small and mid-sized companies.
CEFA:
Hansjoerg, over the past year, global markets have seen significant shifts in trade policy, supply chains, and energy policy. And Europe has dealt with the challenge of the war in Ukraine with Russia for over 4 years. However, German and European markets have been outperforming the US in recent months. Where do you see the German equity market currently?
Hansjoerg Pack:
Currently, we favor almost all other markets over the U.S. market. The main catalysts, I guess, were the election of Donald Trump in late 2024 and the announcement of the newly elected German government in early '25 to increase fiscal spending. The new US administration sends several messages across the Atlantic, which could not be mistaken. Germany announced a massive increase in fiscal spending, mainly on public infrastructure and defense, and laid out plans to reduce red tape in the administrative processes, for instance, adjusting required sustainability reporting for corporations. They were the main triggers.
CEFA:
Are you finding valuations to be attractive, and how do they compare to the U.S. equity market?
Hansjoerg Pack:
On valuations, let's not be misunderstood. We're not at the beginning of a major bull market, and equity valuations globally have gone a long way already, but not to extreme levels. What is interesting is that thanks to the perceived or real US exceptionalism and the run we have seen over the past years in the MAG 7 equities, the valuation premium that the US market always had over European markets has widened to an extreme level. At one point, it was greater than 50%.
CEFA:
What is your outlook for German equities as we move forward in 2026?
Hansjoerg Pack:
For 2026, we're quite constructive on German equities, supported by the fiscal impulse, political stability, and an improving growth momentum. In our house view, we see Germany as the main beneficiary of Europe's fiscal turn. We are expecting low double-digit earnings growth for the German market in 2026. And currently, we would prefer smaller and medium-sized companies in Europe and in Germany.
CEFA:
Hansjoerg, how do you see an allocation to an actively managed German equity strategy like New Germany Fund best positioned for a broadly diversified portfolio of a U.S. investor?
Hansjoerg Pack:
Look, the German economy roughly accounts for 4.5% of global GDP, according to the IMF or the World Bank data. On a PPP basis, it's probably a bit lower, say 4%. In terms of market cap, the German market only accounts for roughly 3% of global market cap.
CEFA:
Hansjoerg, thank you so much for taking the time to join us today.
Hansjoerg Pack:
My pleasure. Thank you.
CEFA:
We want to thank you for tuning into another CEF Insights podcast. For more educational content, please visit our website at www.CEFA.com.
Podcast recorded February 2026.
Disclosure
This material is not, and is not intended as investment advice, an indication of trading intent or holdings or the prediction of investment performance. All fund-specific information is the latest publicly available information. All other information is current as of the date of this presentation. All opinions and forward-looking statements are subject to change at any time.
DWS disclaims any responsibility to update such views and/or information. This information is deemed to be from reliable sources; however, DWS does not warrant its completeness or accuracy. This presentation is not intended to, and does not constitute an offer or solicitation to sell or a solicitation of an offer to buy any security, product, investment advice or service (nor shall any security, product, investment advice or service be offered or sold) in any jurisdiction in which DWS is not licensed to conduct business, and/or an offer, solicitation, purchase or a sale would be unavailable or unlawful.
The fund seeks long-term capital appreciation primarily through investment in middle-market German equities.
This Fund is diversified, but primarily focuses its investments in Germany, thereby increasing its vulnerability to developments in that country. Investing in foreign securities, particularly of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. Any fund that concentrates in a particular segment of the market or a particular geographical region will generally be more volatile than a fund that invests more broadly.
War, terrorism, sanctions, economic uncertainty, trade disputes, public health crises and related geopolitical events have led and, in the future, may lead to significant disruptions in U.S. and world economies and markets, which may lead to increased market volatility and may have significant adverse effects on the fund and its investments.
Risk considerations
Closed-end funds, unlike open-end funds, are not continuously offered. There is a one time public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Shares of closed-end funds frequently trade at a discount to net asset value. The price of the fund's shares is determined by a number of factors, several of which are beyond the control of the fund. Therefore, the fund cannot predict whether its shares will trade at, below or above net asset value.
For more information regarding The New Germany Fund, Inc., please call 1-800-GERMANY. To communicate with the Board of Directors or an individual Director of the Fund, a stockholder must send a written communication to the Fund's principal office at 875 3rd Avenue, New York, New York 10022-6225 (c/o The Fund), addressed to the Board of Directors of the Fund or an individual Director, and the Secretary of the Fund. The Secretary of the Fund will direct the correspondence to the appropriate parties.
The brand DWS represents DWS Group GmbH & Co. KGaA and any of its subsidiaries such as DWS Distributors, Inc., which offers investment products, or DWS Investment Management Americas, Inc. and RREEF America L.L.C., which offer advisory services.
1095145-1 (3/26)
Glossary of Terms
Basis Point (bp): One hundredth of a percentage point (0.01%).
Closed End Fund (CEF): An investment company with a fixed number of shares that typically trades on an exchange; market price may differ from NAV.
CO₂ Emissions: Carbon dioxide emissions; may be subject to regulation affecting certain industries.
Cyclical / Cyclicals: Companies or sectors whose performance tends to rise and fall with the business cycle (economic expansion/contraction).
DAX 40: A German large cap equity index of 40 companies (commonly used as a benchmark).
Disinflation: A slowing in the rate of inflation (prices still rise, but more slowly).
Dividend: A cash distribution paid by a company to shareholders (not guaranteed).
Earnings Catch Up: A period when earnings growth rebounds after prior weakness.
Equity / Equities: Ownership interests in companies (stocks).
Equity Linked Securities: Instruments whose value is tied to equity performance (e.g., certain convertibles or derivatives).
Fiscal Spending: Government spending (e.g., infrastructure/defense) that can influence economic activity.
Free Float: Shares available for public trading (excluding closely held stakes).
GDP (Gross Domestic Product): A measure of economic output for a country.
Hidden Champions / Niche Leaders: Highly specialized companies with strong positions in narrow markets.
IMF / World Bank: International organizations that publish economic data (among other sources).
Inflection Case: A company where investors expect a meaningful change in fundamentals (e.g., improving earnings trend), which may or may not occur.
Liquidity: How easily an investment can be bought or sold without significantly affecting its price.
MAG 7 ("Magnificent Seven"): Informal term often used for a group of large U.S. technology oriented mega cap stocks; definitions vary by source.
Market Capitalization (Market Cap): Company value based on share price × shares outstanding.
Middle Market: Generally refers to mid sized companies; exact definitions vary.
Mittelstand: Common term for Germany's small and medium sized enterprises (many are privately owned).
Momentum (Style Factor): A factor associated with securities that have performed strongly in recent periods (can reverse).
Multiple (Valuation Multiple): A ratio used to value a company (e.g., price to earnings).
NAV (Net Asset Value): (Fund assets ? liabilities) ÷ shares outstanding; for CEFs, market price may differ from NAV.
Normalized Earnings: Earnings adjusted to remove unusual items or to reflect a "mid cycle" level.
Overweight / Underweight: Holding more/less of a security/sector/region than a reference benchmark or neutral stance (not a guarantee of results).
Performance Index: An index that assumes dividends are reinvested.
PPP (Purchasing Power Parity): A method for comparing economic size/wealth adjusted for cost of living differences.
Small /Mid Cap: Smaller or medium sized companies; often more volatile/less liquid than large caps.
Supervisory Board / Two Tier Board: Governance structure common in Germany separating oversight (supervisory board) from management (management board).
Value Premium: The excess return earned by value stocks (companies with low valuations such as low price to book, price to earnings, or price to cash flow ratios) relative to growth stocks (companies with higher valuations and higher expected growth).
Volatility: The degree of variation in an investment's price over time.