Open-Ended Real Estate Investment Funds

Investors purchase units in an open-ended real estate fund via their bank, becoming co-owners of the fund’s assets in direct proportion to the amount of units they hold, thereby also acquiring an interest in the fund’s properties. Details of the individual properties are contained in the annual report of the fund. Holders of units in real estate funds can rely on the expertise of experienced managers and thus avoid the effort normally involved in purchasing a property directly. The role of the fund manager is to buy properties and let them on long-term leases, and sell them later when market conditions are favourable. Open-ended real estate funds should always be viewed as a long-term investment.

Open-ended real estate funds provide a solid foundation for a securities account. By adding such funds, investors can introduce greater stability into their investment portfolio. Fund-based savings plans involving regular payments are particularly well suited to long-term wealth creation. The performance of open-ended real estate funds is testament to their dependability: Over the past five years, they have returned 3.5% p.a., over the past 10 years 4% p.a., and over the past 20 years almost 5% p.a. (source: BVI, information current at 30 November 2010).

• Open-ended real estate funds are managed by German investment management companies, and governed by strict regulations.
• Open-ended real estate funds pool money from many investors and purchase attractive properties and land both in Germany and abroad.
• Investors receive unit certificates for the money they pay in and thus become “co-owners” of the properties, which may be shopping centres or office buildings, for example, depending on the fund’s holdings.
• Like property held in direct ownership, real estate funds should be viewed as a long-term investment. Nevertheless, fund units can be sold at any time.*

01 November 2011