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The Role of Open-Ended Real Estate Funds in Long-Term Portfolio Growth

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  • Sven Rehers

Abstract

The demographic shift and the limitations of Germany’s pay-as-you-go pension system underscore the growing importance of private long-term wealth accumulation. Open-ended real estate funds (OEREFs) may serve as a useful instrument in this context, offering access to broadly diversified property portfolios with relatively stable returns.This paper aims to examine the potential role of OEREFs in long-term wealth building for private investors. Based on a mean-variance optimization framework, it will analyze how the inclusion of OEREFs affects the efficiency of mixed-asset portfolios over time. In addition to return and volatility metrics, the study will incorporate shortfall risk measures and conduct stress tests to assess the robustness of different allocation strategies under varying market conditions. Simulations will be based on historical data on returns, volatilities, and asset correlations.By exploring how OEREFs can contribute to a stable and resilient accumulation of capital, the paper seeks to generate actionable insights for the design of long-term investment strategies tailored to the needs of individual investors.

Suggested Citation

  • Sven Rehers, 2025. "The Role of Open-Ended Real Estate Funds in Long-Term Portfolio Growth," ERES eres2025_199, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2025_199
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    JEL classification:

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

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