GERMANY - Real estate Spezialfonds and corporate bonds have offered German institutional investors the best risk/return profile over the last 10 years, according to research by real estate company Patrizia.
Using index data from for range of asset classes - including equities, bonds, money markets, covered bonds, direct real estate, real estate Spezialfonds and real estate mutual funds (OIF) - Patrizia considered the risk/return profiles of each and their correlation to one another.
It said real estate Spezialfonds could "significantly increase" returns in a mixed portfolio because they hardly correlated with any other asset class.
Karin Siebels, head of commercial research at Patrizia GewerbeInvest KAG (formerly LB Immo Invest) pointed out that, while research on funds, investor behaviour and the performance of real estate had "filled entire bookshelves", the contribution of Spezialfonds had been "barely looked into".
Patrizia found the worst risk/return profile in equity investments, to which real estate Spezialfonds are "considerably negatively correlated".
The real estate company said it was "remarkable" that the DIX - which shows the direct real estate investments of German institutional investors - had regularly lagged the Spezialfondsindex SFIX and the OFIX "by one or two percentage points".
"From this," Siebels said, "we can conclude that external fund specialists were the better real estate asset managers."
Martin Lemke, managing director at Patrizia, said his company's building-block concept that offers Spezialfonds to institutional investors - implemented in 2002 - had outperformed the SFIX by nearly twice as much.
"These pooled funds allow investors with smaller volumes to reach a diversification within the asset class real estate," he said.
Patrizia GewerbeInvest KAG is currently managing around €2.5bn.