IPD German real estate Spezialfonds: increased transparency highlights marked performance differences

Second quarter returns for German institutional property funds from the IPD/BVI German Quarterly Spezialfonds Index SFIX; and German retail property funds from the IPD German Monthly Open Ended Funds Index OFIX, stood at 0.1% and -0.2% respectively. Within both groups of funds, those vehicles invested in Germany substantially outperformed European-targeted funds.

Twelve new Spezialfonds contributed data to the SFIX index for the first time this quarter, boosting the sample to 141 funds worth €33.1 billion. NAV. In contrast to many other IPD local fund markets, the assets of German institutional investors are widely distributed across Europe. In terms of Net Asset Value (NAV), only one third of SFIX funds contribute to the sub index SFIX Germany, and more than 50% of the funds are part of the sub index SFIX Europe.

German-allocated funds have outperformed European-allocated funds in all but four of the 26 quarters between Q1 2007 and Q2 2013. For the first half of 2013, the SFIX headline index returned 0.5%, with SFIX Germany funds returning 1.8%, while SFIX Europe funds returned only -0.3%. Over the medium-term perspective of one, three and five years, this outperformance persists, with SFIX Germany annual returns ranging between 3.4%pa and 3.7%pa, while SFIX Europe returns ranged between -0.2%pa and 1.1%pa.

The regional asset allocation strategies of SFIX Europe funds vary much more than allocation differences among SFIX Germany funds. Accordingly, the spread of fund returns between the first and third quartiles, is much wider for the European allocated sample. Upper quartile European-allocated funds returned at least 4.2% between Q3 2012 and Q2 2013, while lower quartile funds lost -4.0% or more. Upper quartile German-allocated funds returned at least 6.2% over that period, with lower quartile funds returning less than 3.2%.

Daniel Piazolo, Vice President & Geschäftsführer in Germany, IPD, said, “For the first time we now have the opportunity to analyze fund returns for an impressive sample of 141 leading market participants. This has produced some revealing insights, for instance the strong performance of German-allocated funds compared with their counterparts investing in the rest of Europe. We will continue to analyze these returns and will publish our annual performance study on German institutional real estate funds at Expo Real in Munich this October.”

Source: IPD

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