Spezialfonds and Luxembourg vehicles benefit from GOEF outflows: CBRE

The institutional capital leaving German open-ended funds (GOEFs) as a result of changes to the German Investment Act is mainly flowing into Spezialfonds and Luxemburg-domiciled collective vehicles, according to new research by CB Richard Ellis.

CBRE said one of the reasons for the transfer to Spezialfonds is that many fund managers that run public GOEFs also run Spezialfonds, a traditional and tax-efficient investment option for German institutions. 'This leads us to believe that the change can be incorporated fairly quickly by the existing fund managers, mainly those that have weathered the GOEF crisis well,' Iryna Pylypchuk, associate director of EMEA Capital Markets Research at CBRE, said.

'However, in the medium term, and considering that this transition will be a lengthy one, I believe this influx of institutional capital will also benefit other unlisted real estate funds, especially those that are tax-efficient for a German investor,' she added. 'Much of the institutional capital is locked into those GOEFs that are being liquidated or are closed to redemptions. Thus, it will be over the course of the next two-to-four years that institutional capital will continue to leave GOEFs, allowing fund managers both in and outside Germany enough time to set up appropriate strategies and absorb much of this capital in an orderly way.'

While institutional capital is poised to flow out of the GOEFs, the next year or so could see inflows from private investors increase, according to CBRE.