EUROPE - Smaller pension funds may need to be more active in their handling of real estate assets than larger pension funds, suggests evidence presented at the recent IPE Real Estate Forum.

Hermann Aukamp, chief investment officer for real estate Nordrheinische Artzversorgung (NAEV) told delegates of the recent IPE Real Estate Forum in Berlin his fund has been very active in some of its investments in the last 18-24 months and has been able to avoid being caught by many of the problems seen in the real estate markets experienced by other pension fund investors.

Since December 2006, the German doctors fund NAEV has made four key changes to its investment strategy in a short space of time, in a bid to capture gains in the changing market, as according to Aukamp, "if you have told your pensioners we can react quickly, you have to do so".

As a result, the fund was able to take advantage of key changes in the sector, ahead of the major shift in sub-prime revelations and following what he describes as "the big turning point when Equity Office Properties as sold to Blackstone", by using, for example, its links with Australian pension funds.

Moves made in that time were:

December 2006 - Left the US Reits market; Early 2007 - Increased its holdings in the Australian market; Q2 2007 - Unlisted market: Reduced its US investments  and increased Asian unlisted exposure; Mid/end 2007 - Exited the Australian market and moved those assets into cash Mid/end 2007 - Decreased holding in IVG Mid/end 2007 - Began investing in niche products.

Part of Aukamp's explanation for more active management of the fund's real estate allocation is a smaller fund could be hit harder by market changes if it does manage assets actively, as leaving it to external asset managers is likely to mean those funds are part of several mandates a fund manager has to manage.

In contrast, Hans Op't Veld, senior investment strategist for structured investments at PGGM, said his firm - set up as a division of the €88bn PFZW pension fund - tends to act in the same manner at all times, and regardless of how markets are performing,  because the PGGM "tanker" takes so long to turn around.

"The range for movement [at a larger fund] is small when other assets are moving too. It means we are quite happy to try and maintain the allocation we set out to achieve. We find it very difficult to assess real estate and make quick changes as we must take other assets into account," said Op't Veld.