German open-ended funds record EUR 94 mln net inflow

German open-ended funds had a net inflows of EUR 94 mln in November. 'Although not as big as October's EUR 530 mln, this still indicates that the sector is regaining investor confidence,' according to a new report by the research department of global property advisor CB Richard Ellis.

Less than a year ago the German open-ended fund sector was plunged into a crisis of confidence that led to the closure of several funds to withdrawals and serious liquidity problems for several others. The result was the sale of over EUR 7 bn of property in the first half of 2006 alone and further significant disposals in the second half of the year.

'The profile of most funds is now very different, with much greater diversification and substantially less exposure to the domestic German property market,' the report said.

CB Richard Ellis cautioned however that the methods used last year, such as temporally fund closure, may still be used in the future. But in what the report termed a 'somewhat different turn', Deutsche Bank after a major portfolio sale will not be issuing new shares for the Grundbesitz-invest until further notice to avoid an influx of speculative capital. The fund is soon to be renamed 'Grundbesits-europa' to reflect its geographical shift away from Germany.

'Amongst the funds there is now a clear polarisation between those that continue to strategically position themselves as mainly investing in Germany and those that now have an increased international focus. With the German property market experiencing a positive period it will be interesting to see if the benefits of further falls in yields and potential rental growth will translate into investor returns.'

The researchers also noted that a recent report in the Financial Times Deutschland on the creation of separate stock exchange indices for newly-formed German real estate investment trusts (REITs) may have implications for the open-ended fund sector.