Infrastructure funds can be a good alternative

Wind farm in Thuringia

Investors should look closely at which companies invest funds. This could be companies from the wind energy sector.


(Photo: dpa)

Frankfurt They still exist, the boring investments that deliver their returns even in times of crisis. Certainly not 20 percent can be achieved with it, as with shares in good years. But they already achieve an average return of four to five percent. This applies to infrastructure funds, for example, which can be an interesting alternative to stocks for private investors and ensure stable earnings.

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Short ETF speculation is tricky

Bull and bear on the edge of a crumbling cliff

To bet on price losses on the stock exchanges is only worthwhile in the short term.

(Photo: imago images / Ikon Images)

Equities, oil, gold – a look at the fund balance sheet for the first quarter shows that the bottom line is that investors have lost a lot of money in most asset classes. Investors who bet on falling prices have made money, but these bets are tricky.

So-called short ETFs are one way of speculating on falling prices from indices. These exchange-traded index funds reflect the opposite percentage development of indices.

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How the corona crisis affects open-ended real estate funds

Erfurt Claus 2020 has big plans for 2020. The managing director of BNP Paribas REIM in Germany – the real estate investment arm of the French major bank – plans to launch an open real estate fund.

With this, the investment manager, whose real estate expertise in Germany has so far been reserved primarily for wealthy and institutional investors, also wants to enter the market for retail funds.

Or rather: wanted. According to the original plan, the fund should start selling at the beginning of April. But then Corona came and everything for Thomas’ plans was different than expected. “We have now postponed the start of our new mutual fund to June 2020,” he says.

The virus pandemic not only keeps the economy under control, but also the capital markets. If retailers and hoteliers today apply for deferral of rental payments to bridge their slump in sales as a result of the prescribed standstill, sooner or later investors in open-ended real estate funds will also be affected. Through the funds, they are indirectly the landlords of the industries concerned.

Corona crisis different from financial crisis

The situation brings back memories of the financial crisis, when real estate values ​​had to be corrected and funds closed because too many investors wanted their money at once. Experts also expect returns from the funds to decline as a result of Corona. Nevertheless, the situation today is different from that in the financial crisis.

At that time, the epicenter of the financial crisis was in the real estate sector. High-risk real estate loans failed, the nervousness spread rapidly to other real estate classes. In droves, investors withdrew funds from the open real estate funds.

graphic

Because they didn’t have enough liquidity buffers to earn all the claims, they were frozen. The funds bought time to monetize their properties. In general panic and under great time pressure, they sometimes made considerable losses, which ultimately also had to cope with the investors.

Today, there is no high-risk real estate loan at the beginning of the economic crisis, but a virus. “What we know from previous financial crises is that the spillover effects become more apparent the closer they are to the cause,” explains Steffen Sebastian, professor of real estate finance at the Ireb Real Estate Academy in Regensburg. However, the real estate is not in a crisis of confidence today.

In the corona crisis, retailers and hoteliers ask for rent deferrals because they are not allowed to open their shops and break down sales – and not because they have encountered problems due to a previously miserable business situation. For many companies, it is a stress test.

“Tenants from the hotel and retail sector have informed us that they want to negotiate their rental payments with us,” says Esteban de Lope, Managing Director of Deka Immobilien. The fund house is not alone in this. The other large providers from Commerz Real to DWS to Union Investment Real Estate also report on corresponding inquiries.

In the interests of investors

This puts the funds in a delicate position: On the one hand, they have an interest in keeping long-term leases – and thus secure income – in the funds and helping their tenants with a temporary solution.

On the other hand, they have to work for their customers, the investors. “We are committed to our investors and therefore do not grant flat-rate deferrals or rent reductions,” said a spokesman for Union Investment Real Estate. In plain language: deferrals remain individual decisions.

If rents are deferred, only the time of payment is postponed. They still have to be paid. But: “There could also be rent losses or rent adjustments here,” says Sonja Knorr, real estate fund analyst at the rating agency Scope.

The funds are also aware of the consequences: “Overall, it can be expected that the rental income of the funds will decline this year,” says de Lope from Deka. No fund manager can and does not yet estimate the extent of the decline.

graphic

Investors are not entitled to immediate notification of deferral or loss of rent: “There are no ad hoc notification requirements for open-ended real estate funds. If the fund defers rents or even loses rents, it does not have to notify it immediately. This is enough in the quarterly notifications to investors, ”explains Carola Rathke, partner at the business law firm Eversheds Sutherland in Germany.

Some providers already confirm revaluations. A spokesman for Commerz Real, for example, reports that in the first three months of this year objects dominated by retail were devalued by the experts.

But this also includes: The problems in the trade already existed before Corona, they have now been exacerbated by the crisis. At the same time, Commerz Real emphasizes: “At the moment, however, we are not seeing any significant effects on the management of our properties.” The provider calculates the fund’s return at 2.0 to 2.5 percent, roughly on the previous year’s level.

Loss of yield

Analysts remain more skeptical about the outlook. Rüdiger Sälzle, head of the fund analysis firm Fonds Consult, expects yields to fall by 50 to 100 basis points due to the corona crisis.

“On average, I expect a return of 1.5 to two percent,” says Sälzle. That was calculated conservatively, but manageable in view of the general conditions. The drop in rental income is likely to be felt initially, alongside property valuation and interest on liquidity, one of the return components of the funds. Where new contracts are due and the new rents are significantly lower than the previous ones, this will also lead to devaluations for real estate, says Sälzle.

The bottom line, from today’s perspective, returns remain in the positive range. This speaks in a market environment with highly volatile and sometimes sharply declining stock and bond markets for real estate. Morningstar analysts are already showing that European investors are drawing more capital from equity, bond and mixed funds than ever before.

graphic

There are still no official data for the real estate funds. Those of the BVI fund association for the first quarter will not be published until May. Scope analyst Knorr recognizes investment reluctance. “But we cannot see any waves of sales.”

The funds themselves report positive inflows in the first quarter. Commerz Real’s house investment has recorded inflows of 470 million euros since the beginning of the year. “The announcements of returns are still in the single-digit million range,” said a spokesman.

Union Investment Real Estate, whose funds UniImmo Germany and UniImmo Europe are among the largest open mutual funds, also reports on return claims in the single-digit million range. A spokesman for DWS says there are still positive net inflows – ie investments less return requests – and “generally no significantly increased return requests”.

Longer holding periods

In order to prevent a sudden, massive withdrawal of capital, which caused the funds to plummet during the financial crisis, stricter regulations apply anyway. Since 2013 it has been said that anyone who buys an open-ended real estate fund must hold it for at least two years.

Anyone wishing to redeem their shares can only do so with a notice period of one year. The illusion of a completely liquid trade in an illiquid product such as real estate was taken away from investors. Because when the going gets tough, the financial crisis showed, the funds have to sell their assets – and that is far more difficult than trading a stock package on the stock exchanges.

However, there is one exception for investors who bought their shares before 2013: they can withdraw up to EUR 30,000 from the fund every six months. “Today, however, the funds have sufficient liquidity to service these claims,” ​​says analyst Knorr, drawing attention to another difference to the financial crisis. The average liquidity ratio is 20 percent of the fund’s assets. 50 percent must be invested in real estate.

Debt financing is also more conservative today than in the financial crisis, says Knorr. Before the financial crisis, the average was 28.6 percent, today it is 15.1 percent. Some funds even had quotas of more than 40 percent.

With this credit lever, earnings could be increased in good times. This also applies reciprocally to the losses. “Today, a debt ratio of up to 30 percent is required by law. This is very conservative for real estate transactions, ”explains Knorr.

If funds fall below threshold values, for example that less than 50 percent of the fund’s assets are held in real estate, the capital management company must inform Bafin, who acts as the supervisory authority, explains Martina Sradj, partner of Eversheds Sutherland in Germany.

Private investors among themselves

Another stability factor: up to the financial crisis, semi-professional and institutional investors were invested in open real estate funds to a much greater extent than today. “Funds of funds or asset managers were very quick to return their shares at the time,” says Knorr. Today, these actors are not prohibited from investing in open-ended real estate funds. However, a wide range of alternative products has only developed for institutional investors in recent years, which is usually also cheaper.

The proportion of institutional investors in open-ended funds cannot be clearly quantified, but is significantly below the level of the financial crisis. Real estate funds of funds have disappeared from the market for private investors, explains Knorr.

The lawyer Rathke from Eversheds Sutherland adds: “Today, institutional and semi-professional investors are not directly prohibited from investing in open-ended real estate funds. However, there are strict requirements in terms of tax law, so that an investment in the open products is generally excluded. “

If people in countries like Germany, Austria or the USA are talking about relaxing the corona restrictions when shops are allowed to open again, then this should also make things easier for investors in open real estate funds. However, these measures are not a guarantee of a return to normalcy. This also applies to the real estate world. Sälzle, for example, points out the so-called second-round effects: “How the corona crisis will affect the real estate segment in the medium to long term is still completely open,” says the analyst. So the world is today in the “largest joint field trial in the home office”.

In the future, people will return to their normal jobs. But the office world doesn’t have to be the same. “The structure of the office space will change in the medium term. In the future, less space could be rented and employees could be given more flexibility in dealing with their home office, ”says Sälzle. What that means for the funds as a landlord is not yet clear.

Claus Thomas of BNP Paribas REIM, whose fund is due to launch this year, is not worried by this. He already has several objects in sight for sale, including a hotel in Munich. Although hotels in Corona are under particular pressure, he still assumes that use will develop above average in the long term, says Thomas. His fund should also focus on megatrends such as digitization and also invest in healthcare properties – two areas that could well benefit from the corona crisis.

More: Where investors can still find returns in times of the corona crisis

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Alternative Investments: Return in Corona Times: How to Make Money Now

Fluctuations on the stock exchanges are extreme due to the Covid 19 pandemic. But there is a way out: alternative investments. The Handelsblatt presents them. .

Gold, hedge funds, real estate: Yield in Corona times: With which investments you can now earn money

Fluctuations on the stock exchanges are extreme due to the Covid 19 pandemic. But there is a way out: alternative investments. The Handelsblatt presents them. .

Fund investors in Europe are pulling record amounts of money

Pimco headquarters in California

As a bond house, Pimco has benefited greatly from the boom in this asset class in recent years.

(Photo: Pimco)

Frankfurt A cartel of silence dominates the European fund market. None of the big asset managers want to talk about the massive escape of investors from the products. In March, customers in Europe withdrew a total of 232 billion euros from funds because of the corona panic in the markets – more than ever before.

The number is based on the latest estimates from the rating agency Morningstar for the Handelsblatt. It is significantly higher than the data published a little more than a week ago. “The number should also continue to rise because we still lack information from some funds,” says Morningstar analyst Ali Masarwah.

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Hedge funds offer airbags for investors in difficult stock market times

Canary Wharf, the financial district of London

Banks and hedge funds in financial centers are under pressure.

(Photo: AP)

Frankfurt The corona crisis sent stock markets around the world on an up and down ride. In most other asset classes, the minus signs often outweigh the performance; on many trading days, investors experience extreme price fluctuations. But even in these times there are still investments in the financial markets that are relatively robust.

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Celebrity funds shine in the crisis

Kai Diekmann and Leonhard Fischer

The two celebrities rely on small returns and promise great security.

(Photo: Getty Images)

Frankfurt It is a crisis – and investors are suffering too. All? No, there are few winners in the chaotic trading weeks. These include the celebrities Leonhard (“Lenny”) Fischer and Kai Diekmann. The ex-banker and the media professional suddenly make positive headlines with their financial product “The Future Fund”.

With the mixed fund, they mastered the crisis weeks and even posted a slight gain of one percent in the first quarter (see chart). Given the historic stock market slump in March, that sounds like science fiction. Virtually all competitors lick their wounds after high losses. “We are not crash prophets, but our approach has proven itself,” comments Fischer, who once made a name for himself as the youngest board member of Dresdner Bank.

A little over two years ago, the financial expert and the former editor-in-chief of the tabloid “Bild” started. They wanted to shake up the investment scene and initiated the fund as a savings alternative in the world without interest. The specially founded Deutsche Fondsgesellschaft serves as a sales unit.

A total of five people pull the strings, in addition to the two protagonists, including Volker Schilling. The board of the asset manager Greiff Capital Management controls the fund in day-to-day business. Communication expert Diekmann supports the project with the digital magazine “Zaster”, which is part of the German fund company, and is intended to prepare money issues in a way that is easy to understand for a broad audience.

Over the years, the critics have come forward. The market was flooded with mixed funds, so there was no need for any more, it was often said. In fact, the analysis company Scope Analysis in Germany counts around 2000 such products with a total capital of over 500 billion euros.

Comparatively little capital

Quite different houses set the tone here. The capital is concentrated on the flagships of some large houses. And they often have volumes in the double-digit billion euro range. These include, for example, a “Multiple Opportunities” by Flossbach von Storch or an “Allianz Income and Growth” by Allianz Global Investors.

graphic

In comparison, the future fund is an important one. Even today, the fund only has a measly ten million euros in capital. Last spring’s top was almost 16 million euros.

An important point is of course the investment result. That is where the critics start. The yields were moderate. In the stock market boom year 2019, the future fund almost turned out to be a loser with its return of just under four percent. It was the low equity quota that made the result look weak.

So skeptics remain true to their line. “The fund made losses last year and only returned to its level from the start this year,” complains Ali Masarwah, analyst at the fund rating agency Morningstar. He says: “Customers were attracted by the keyword savings book replacement, and the fund did not deliver that solely in terms of performance.”

André Härtel from Scope Analysis is equally critical. “They wanted to revolutionize the investment industry, but this revolution has so far failed to materialize,” says the fund expert. You have to know: At the start, the strategists spent 20 billion euros as a long-term sales target. The gap to the status quo is therefore enormous.

Advertising misses its target

Some skeptics also speak of a misjudgment by the two initiators. Then the two strategists misjudged their own celebrity factor. Although Fischer is known in the financial scene and Diekmann in the media industry, Otto ordinary investors could not associate anything with the names. A surge in sales above the level of awareness is therefore a self-deception.

graphic

Various promotions for the product also had no effect. This included, for example, advertisements in the media. The digitally offered fund does not have a sales partner such as a bank. “We can be cheaper for that; every fee saved means more return for the investor,” argues Fischer. According to Morningstar, the fund is actually cheaper than many competing offers with an annual fee of just under one percent.

If, after the previous failure, a turn started, the key could be the March events. In any case, the tax men at the Future Fund look like supermen with their short-term income after a few weeks in the new corona world.

Greiff Capital man Schilling dismisses the key word: “We are not heroes, we are just stubborn how we pursue our approach.” Fischer and manager Schilling look closely at the risk. You watch the price trends and price fluctuations.

In the past year, stocks rose extremely, while price fluctuations were small. They interpreted this as a warning signal. “That’s why we reduced the risk while other investors increased the share quotas,” says Fischer. The fund had pushed the equity component down to twelve percent, and in the past few weeks had pushed it back up to 20 percent as a result of the price setbacks, as Schilling explains.

The griffin expert increased his stock position Equinor auf, a Norwegian oil and gas company, which he finds “incredibly lucrative”. He had last joined at Microsoft and BASF: “After the price losses, they were simply attractive.”

High cash holdings and half in bonds

It is very important to him that the cash in hand is now a fifth of the fund’s capital. Just under a tenth reach the gold position. Around half of the money is invested in bonds, much of it in corporate titles and US government bonds. After the catastrophic losses in the bond markets in March, yields had increased enormously. He took advantage of these opportunities with acquisitions, for example, of the Chinese Shuguang Group.

A new purchase are papers from the US group Colgate-Palm olive. In general, he prefers short maturities and stocks with good ratings for corporate paper. The energy and utilities industry is particularly interesting.

However, the manager considers a discussion of individual stocks to be of secondary importance in relation to the critical situation of the overall market. This is easily lost in discussions in a broader public. Too often you focus on the action on the stock markets with their big swings.

But the bond markets are more important. if only because they are much bigger. “Illiquidity is the biggest risk here,” says Schilling. “A few weeks ago there were no buyers for some stocks with a” BBB “rating, there was a real buyers’ strike, which is fatal,” recalls the fund manager. The situation was systemic for Fischer. He is certain: “The bond markets would have collapsed if we had not seen the most massive fiscal and monetary measures ever.”

Every crisis bigger than the previous one

From a high bird’s eye view, the ex-banker sees the central banks in a special position. “They are the only risk managers worldwide, the last saviors, so to speak.” The market economy had long since had its day in the financial industry.

The 57-year-old looks over the past decades and recognizes an accelerated accumulation of danger over time: “Every crisis goes faster, and the volumes used to combat the central banks are getting bigger.” Now the US Federal Reserve even buy corporate bonds, which is actually prohibited be. “Rules have to be broken, otherwise the system will collapse,” he concludes.

Former picture boss

From January 2001 to December 2015, Kai Diekmann was editor-in-chief of the Bild newspaper.


(Photo: dpa)

With a view to the corona situation, Fischer expects the economy to pick up in May. The economy could only go through a shutdown for a month or two. However, he does not anticipate a depression similar to the events of the 1929 like extreme pessimists.

The comparison is wrong because the economic basis has not been destroyed today. “I can imagine a stagflation like the one in the 1973 oil crisis,” says Fischer. Weak growth is conceivable with inflation of three to four percent and interest rates of a maximum of two percent. “In other words: a gradual expropriation, we call it financial repression,” explains Fischer. That is the price of a “completely manipulated monetary and economic order”.

The return targets are small

In this financial world, strategists believe they can successfully immunize themselves – with their own investment policy. They don’t have big earnings ambitions. Your goal is a long-term annual return of two to four percent. This should serve as a substitute for abolished savings interest.

So far, however, the celebrities have not been able to convince their target customers – as can be seen from the low fund capital. The support from Diekmann’s “Zaster” is probably of little use. The 55-year-old media man digitally delivers stories of the brand “How to weather your first stock market crash” or “10 things for which I no longer spend money because of the corona virus”.

It remains to be seen whether Fischer and Diekmann can use the fund to build on their successful youth connections. They played together as children and attended the same school in Bielefeld. There they also worked together in the school newspaper.

Your age project in the fund management for both new Metier requires patience in any case. At least that’s how Fischer sees it, who wants to convince with figures in the long term. He emphasizes this in typical financial German: “We systematically build up performance.”

More: The crisis is causing panic among investors – they are pulling money out of funds for record amounts

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ETFs celebrate an anniversary in crisis

Bull and bear

The most popular are, among others, ETFs on classic equity staves such as Euro Stoxx50, S&P 500 or MSCI Welt.


(Photo: dpa)

Frankfurt The financial industry stands for crises. There were three in this millennium alone. But if there is a success story in the investment world, then index funds are part of it. On the Deutsche Börse, the two ETF products that existed just two decades ago have now grown to more than 1,500. This includes EUR 673 billion in investor funds. The word boom comes to mind – and is not an exaggeration.

At first, the rush may surprise you. After all, there is no flesh-and-blood fund manager with exchange-traded index funds. Instead, a computer autonomously controls the system based on an index.

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Norway’s sovereign wealth fund loses 104 billion euros

Nicolai Tangen

From September, hedge fund manager Nicolai Tangen (shown here on the screen) controls the oil fund.

(Photo: via REUTERS)

Oslo Norway’s sovereign wealth fund lost around 104 billion euros in the first quarter due to the market turmoil due to the corona crisis. This is announced by the world’s largest sovereign wealth fund.

This enabled him to narrow the loss somewhat with the slight recovery in the markets towards the end of the quarter. By March 26, he had even lost 115 billion euros. The entire investment portfolio – which also includes real estate and bonds, for example – lost 14.6 percent.

In the past year, the oil fund achieved an increase in value of around 20 percent, the second best result ever. This growth has now largely been destroyed.

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