EUROPE – IPD and German fund association BVI this week launched a performance index for Spezialfonds they claim will make the funds both more transparent and appropriate for inclusion in multi-asset portfolios.
Based on quarterly data from 2006 onwards, the SFIX index measures the performance of 110 funds with total assets of €27.5bn. It includes a number of sub-indexes based on index participants' 70% exposure to a specific country, region or sector. According to Sebastian Glaesner, IPD fund services manager for Germany, a 70% concentration in one sector or region should form a relatively homogeneous subset.
The index comprises both Spezialfonds and open-ended public funds exclusively targeting institutional investors.
The index's overall return in Q3 was 0.2%, although it returned somewhat better performance (0.8% from funds primarily invested in Germany than for those with a European focus (-0.1%). Retail funds outperformed in sector terms, returning 1% compared with 0.4% for diversified funds an office funds, the worst performers with 0.1%.
Commenting on the timing of the index, Glaesner said historically low market transparency for Spezialfonds had previously made it difficult for IPD to gather a critical mass of data that would make the index meaningful for the market as a whole. Market coverage is now at 60%.
At the same time, IPD would previously have needed to manage concentration risk as a result of IVG – by far the largest market participant – dominating the index.
But Glaesner said strong growth over the past decade, with a number of new entrants to the market, meant index domination was no longer a concern.
"Strong market growth and regulatory pressure both favour the development of a more transparent and professional market," he said.