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German Open Ended Funds: Was there a Valuation Problem?

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  • Neil Crosby

Abstract

At the end of 2005 German open ended funds were subject to heavy withdrawals and a number of funds either suspended dealings or were supported by the parent bank. Fund units are priced by the fund managers based on the asset values of the properties in the funds. The main selling platform of those units is based on a clear commitment to offer a product that has very low risk and volatility. The BVI (German Open Ended Fund representative body) ìsalesî document is sub titled ìAn investment in solid valueî and is packed full of statements like ìa low volatility alternativeî, ìsteady growth in value at a low riskî and ìstable profitability and the absence of wrenching moves in market priceî. How is that low volatility policy delivered within a property fund? One suspicion is that the valuations in Germany are subject to even greater smoothing than in other parts of the world and this paper explores that suspicion and develops a set of questions for the German real estate valuation industry to address.

Suggested Citation

  • Neil Crosby, 2007. "German Open Ended Funds: Was there a Valuation Problem?," ERES eres2007_389, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2007_389
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    Cited by:

    1. Christian Weistroffer & Steffen Sebastian, 2015. "The German Open-End Fund Crisis – A Valuation Problem?," The Journal of Real Estate Finance and Economics, Springer, vol. 50(4), pages 517-548, May.

    More about this item

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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