Suspension of redemption

Unless otherwise defined, in the case of an investment fund or real estate fund, the decision of the fund management to suspend the redemption of issued share certificates. – Such suspension is permitted by law in special cases for a period of two and a half years. However, the holder of a unit certificate can sell it on the open market, where the price is determined by supply and demand. Under certain circumstances, however, a considerable loss may have to be accepted. – When the subprime crisis escalated into a financial crisis in the fall of 2008, many funds introduced a redemption freeze. This was because portfolio reallocations by large investors led to selling pressure even on thoroughly healthy real estate funds. When the German government issued a security guarantee for savings deposits in October 2008, many unsettled retail investors thought that there was no protective shield for their investments in a fund.
They therefore primarily exited real estate funds and put the money into a savings account. – See Real Estate Fund, open-ended, Real Estate Investment Trust. – See BaFin Annual Report 2010, p. 187 (in the wake of the Investor Protection and Function Improvement Act [AnSFuG], the temporary suspension of the redemption of units was extended from two to two and a half years).

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