Investors are opting to liquidate poorly performing funds that are due for termination rather than roll them over, according to new research by the European Association for Investors in Non-Listed Real Estate Vehicles (INREV).
Investors are opting to liquidate poorly performing funds that are due for termination rather than roll them over, according to new research by the European Association for Investors in Non-Listed Real Estate Vehicles (INREV).
The INREV Fund Termination Study 2013 analysed 179 closed-end funds originally due for termination between 2007 and 2015, which together have a gross asset value (GAV) of almost €71 bn.
Approximately one third (€23.1 bn) of the total GAV belongs to funds that are in extension already or will extend after 2013. INREV’s performance data indicate that total returns since the financial crisis for funds that have been extended are on average 6% higher than for funds opting to liquidate.
The study shows that the location of assets held by investors is another important factor affecting termination decisions, with investors demonstrating a strong preference for Western Europe - again indicating a link to performance. Just four countries - the UK, France, Germany and Belgium - account for 57% of the assets of funds in extension.
By comparison, 52% of the assets being liquidated between 2007 and 2015 are in Southern Europe. Spain
and Portugal combined account for less than 16% of all assets in, or due for, extension.
This increased level of confidence in some territories is also highlighted by the more than four-fold increase in the number of funds deciding their termination strategy two years ahead of time, from 6% in 2012 to 26% in 2013. Nonetheless, over half of funds due to end between 2013 and 2015 have yet to decide whether or not they will continue.
A snapshot of the report is available on INREV's wesbite in the publication section.
