Real estate fund provider DEGI plans to cut the German holdings of its core German fund after the fund was hit by €271.5m in net outflows in the first 11 months of 2005. DEGI, part of Allianz Global Investors, said that by 2009, Germany would make up only 60% of its core fund, with the remaining 40% invested abroad, mostly in Europe.
The €5.5bn fund, known as DEGI Grundwert-Fonds, is currently 86% invested in Germany. The Rhine-Main and Rhine-Ruhr regions as well as metropolitan Berlin are the fund’s biggest places of investment. DEGI also plans to increase the diversity of its German portfolio.
Speaking at a news conference, before Christmas, DEGI chief executive Bärbel Schomberg said the net outflows at the Grundwert-Fonds were, in the first place, related to its low return. “Apparently, some investors were not all that happy with a 2% return and have shifted money out of the fund.”
Schomberg expects the outflows at the Grundwert-Fonds to continue this year but said that they would be lower owing to a higher return brought on by the fund’s restructuring. According to her, the restructuring of the fund could add two percentage points to its annual return.
Overall, DEGI said its funds enjoyed €178.3m in inflows thanks to good performance in its other two real estate funds.
DEGI International, which like the Grundwert-Fonds is mainly targeted at private investors, had inflows of €413.8m between January and November. Its total volume is now €1.3bn.
DEGI Global Business, a new international fund mainly targeted at institutional investors, took in €36m during the period.With a market share of 8.6%, DEGI is Germany’s fifth-largest provider of open-ended real estate funds.