German institutional property funds produced a total return of 0.5 per cent at the fund level (NAV) in Q1 2014, according to the IPD/BVI German Quarterly Spezialfonds Index (SFIX).
Those funds with an investment focus on Germany returned 1.4 per cent over Q1, substantially outperforming funds with a European focus, which returned -0.2 per cent.
In the first three months of 2014 the quarterly performance of all SFIX funds was 0.5 per cent, slightly down from 0.6 per cent in the final quarter of 2013. The sub-index for funds mainly invested in Germany stood at 1.4 per cent, substantially higher than in the fourth quarter of 2013 when the performance was only 1.0 per cent.
Funds focused on European markets saw a lapse into negative performance, registering -0.2 per cent in the first three months of 2014 after +0.2 per cent in the final quarter of 2013.
Daniel Piazolo, vice president and Geschäftsführer in Germany, IPD, says: “For the first quarter of 2014, we see that improvement of the overall SFIX index comes mainly from the higher performance of the special funds with strong German allocation. The funds for the institutional investors, as represented by the SFIX, tell the same story as the funds for the small private investors, as shown with the IPD OFIX: Right now they show the best performance for the German allocated funds. The German real estate market still benefits from the safe harbour perception relative to the overall European landscape.”
The IPD/BVI German Quarterly Spezialfonds Index includes 150 SFIX funds, with a value of EUR 34.5bn. NAV. Market coverage is at 64 per cent, as the market for Spezialfonds as a whole experienced strong growth. SFIX market volume reached EUR 54.1bn. NAV, an increase of EUR 6.2bn. compared to the end of 2012.
In comparison with other asset classes, SFIX performance in the first quarter of 2014 stood between German equities at -0.3 per cent (MSCI DE) and German bonds (JP Morgan GBI Global, DE 7-10 years), which returned 3.1 per cent. It should be emphasized 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 per cent pa, equity and bond returns fluctuated much more strongly, with volatilities of 23.2 per cent pa and 6.6 per cent pa respectively.