German-focused funds again outshine European peers

14 March 2014 10:00

German-focused funds have again outshone funds with a broader European weighting in total performance, while retail proved the strongest sector to be in through 2013, according to the latest quarterly report produced by IPD Germany.

German institutional property funds produced a total return of 1.2% at the fund level (NAV) in 2013, as measured by the IPD/BVI German Quarterly Spezialfonds Index (SFIX). Those funds with an investment focus on Germany returned 3.7% over the year, substantially outperforming funds with a European focus, which returned -0.5%.

In the last three months of 2013, the quarterly performance of all SFIX funds was 0.6%, up from 0.1% in the third quarter. The sub-index for funds mainly invested in Germany stood at 1.0%, substantially higher than for funds focused on European markets, which registered 0.2%.

According to Daniel Piazolo, head of IPD in Germany, “Over the whole of 2013, funds with a specialization in retail property outperformed funds focused on offices, while German-focused funds consistently outperformed those focused on the rest of Europe.”

In the last quarter of 2013, ten funds joined the index for the first time, boosting the number of SFIX funds to 150, with a value of €34.5bn in net asset value. Market coverage remained at 66%, as the market for Spezialfonds as a whole experienced strong growth. SFIX market volume reached €52.4bn in NAV, an increase of €4.5bn compared to the previous year.

In comparison with other asset classes, the SFIX performance in 2013 stood between German equities at 2.7% (as measured by the MSCI DE) and German bonds (as measured by the JP Morgan GBI Global, DE 7-10 years), which returned -0.9%.

IPD point out in their report that the moderate returns from Spezialfonds have been accompanied by low volatility during the recent economic crises. While the annualized return volatility of the SFIX between 2007 and 2013 was 1.3%, equity and bond returns fluctuated much more strongly, with volatilities of 23.2% and 6.6% respectively.