German property funds schedules emergency meeting on Berlin proposals

The German investment fund association BVI has called an emergency meeting tomorrow to discuss proposals from the federal Finance Ministry to impose an across-the-board two-year minimum investment period on open-end property funds, but to demand the industry makes a 10% discount on current valuations, also across the board. Sources told PIE the meeting was called at short notice, and described the proposals as highly problematic if adopted. BVI has lobbied against a fixed minimum investment period on GOEPFs for private investors, though sees this as one solution for large institutional allocations. The latter have caused high volatility over the last 30 months, forcing many funds to halt redemptions. One source said the 10% valuation discount is a lawn-mower policy which is totally inappropriate. Fears are that, if introduced, the minimum holding and the discount rules in particular may spark huge capital outflows from the e87bn industry segment. (See upcoming PIE Editions for full story)