Special fund of a capital management company that is invested in at least fifteen properties. Certificates are issued for these. The aim is to make real estate available to small investors on a daily basis. Because the unit certificates can be bought or sold at any time, the fund managers therefore invest the investors’ money not exclusively in buildings and land, but also in near-money assets. This liquidity reserve of the fund must amount to at least five percent of the fund’s assets and rise to a maximum of forty-nine percent. The investment management company is required by the Investment Act to temporarily close a fund if the liquidity reserve is less than five percent of the fund’s assets. – Open-end real estate funds engage in liquidity transformation to a significant extent, namely – financing investments made for the long term with short-term money, also called positive maturity transformation, – but also, because of the possibility of returning the certificate to the fund at any time, converting investments made in long-term investments (real estate) into cash, also called negative maturity transformation, which – makes investors susceptible to fluctuations in liquidity preference, experience shows that cash outflows from the fund increase sharply in times of crisis, – and this in turn triggers herd behavior with regard to any losses in the value of the real estate portfolio, – which can lead to a run, – and which forces the fund management with a temporary suspension of the redemption of the certificates. Section 81 of the Investment Act allows this for a maximum of two years. – With the “Act to Strengthen Investor Protection and Improve the Functioning of the Capital Market (AnSFuG)”, which came into force in April 2011, the legislator introduced further important regulations for open-ended real estate funds on a mandatory basis. For example, the Act stipulates a one-year notice period for all investors. Newly acquired shares in an open-end real estate fund must have been held for at least twenty-four months at the time of redemption. These and other regulations are intended to prevent large sums of money from being parked in these funds only for the short term, which are actually intended to serve as long-term (noncurrent) investments. – See Herdenverhalten, Inventarwert, Real Estate Investment Trust. – See BaFin Annual Report 2010, p. 187 (minimum holding period introduced in the wake of the Anlegerschutz- und Funktionsverbesserungsgesetz [AnsFuG]; valuation intervals prescribed by law), Financial Stability Report 2010, p. 71 (liquidity transformation by the funds; risks), Financial Stability Report 2012, p. 70 f. (design-related weaknesses of open-ended real estate funds and the dangers they pose), Deutsche Bundesbank Monthly Report of January 2013, p. 17 (on balance, open-ended real estate funds record annual inflows of funds), BaFin Annual Report 2012, p: 204 f. (14 funds are in liquidation; further suspension of redemption of unit certificates), BaFin Annual Report 2013, p. 187 f. (funds inflow; trend toward special funds), and the respective BaFin Annual Report, chapter “Supervision of Securities Trading and Investment Business.”
Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent!
University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/