The German Capital Market
For the past 20 years the 'Kandlbinder Report' on Spezialfonds has been published annually in Germany and has established itself as the most authoritative public summary and analysis of the progress of this enormously successful institutional investment vehicle. In 30 years, the sums invested through Spezialfonds has come from scratch to more than DM660bn by this summer, accounting for nearly 70% of the German investment fund marketplace.
This year, with the support of Chase Manhattan Bank, Investment & Pensions Europe decided the Kandlbinder Report should be brought to the attention of a wider public by commissioning an English language translation, given the increasing interest in the German marketplace by institutional investors.
Dr Kandlbinder is regarded as one of the founding fathers of the development of the Spezialfonds and was active in the establishment of the first of these funds in Germany in 1969/71 when he was directly involved in pensions investment. Now he acts as an independent investment consultant based in Grafing near Munich, having built up an internationally high reputation as a result of advising on Spezialfonds and the investment funds arena generally.
This report was published recently in German by Zeitschrift für das gesamte Kreditwesen (issue 16/98) in Frankfurt by Fritz Knapp Verlag. For the purposes of this translation, we have used the term 'specialised investment fund' for Spezialfonds. This is an open-ended investment fund under the German Investment Act (Gesetz über Kapitalanlagegesellschaften - KAGG). The only difference between a specialised investment fund and an open-ended investment fund or mutual fund available to the public lies in the fact that a specialised investment fund exclusively belongs to the investors, who cannot number more than 10, and who are not individual persons, but have a legal form such as a corporation, foundation, institution or association - most funds are set up with just one or two institutions as the investors. There can, in addition, be certain tax and accounting advantages. Through an investment committee usually formed when setting up the fund, the investor has the opportunity to influence the investment policy of the fund.
Each fund is set up and run by a Kapitalanlagegesellschaft (KAG), which is an investment management company established under banking law. The term KAG has been translated as 'investment trust company'.