GERMANY - The German Investment and Asset Management Association (BVI) has weighed into the debate over mooted restrictions on open-ended funds, sparked by a federal ministry proposal that would require property valuations to be cut by 10%.
Under a BVI proposal released on Friday, valuations would take place every sixth month, rather than annually - with no mention of the 10% cut.
In addition, new investors - including pension funds - would face a 12-month holding period. Such a lock-in would "considerably improve liquidity management", the BVI said in a statement.
According to the industry body, the counter-proposal would "improve and enhance the long-term prospects" the industry's products.
"If we didn't think it would work, we wouldn't have offered the proposal," said spokesman Frank Bock. "It was accepted by our members and that's a big point. It's important for private investors - which are a big group here - that there are small changes. But for institutions the change is also necessary."
Bock acknowledged that the ministerial proposal "went much further", but declined to confirm that the federal ministry is unlikely to accept the diluted BVI terms issued last week. "That's the question," he said. "I can only say that we're in consultation and we'll hopefully be able to provide an answer in the next days and weeks."
The BVI proposal is a revised version of an initial report, published in January 2009, which had been accepted by all BVI members. With recovery from financial crisis underway, the BVI is hoping that a new parliament will accept the revisions.
Asked how he thought pension funds would view the document, Bock said: "Pension funds here tend to invest in spezialfonds. We'll have to wait and see the impact of the new framework."