Eurozone real estate funds build equity holdings

Real estate funds in the eurozone have increased the share of their portfolios allocated to equities over the last 11 years and reduced the amount invested in non-financial assets, such as property, data from the European Central Bank shows.

Equity holdings, as a share of total assets held by real estate funds, climbed to 17% at end-2019, from 11% at end-2008. In euro terms, equity holdings have risen by  €124.3 billion ($135 billion) or +369%.

Last year, real estate funds bought €18.2 billion of net equities; the most since at least 2009, when the data series began.


Over the same period, holdings of ‘non-financial assets’, which include property, fell as a share from 66% to 47%. In nominal terms, holdings have gone up €233.9 billion (+118%).

Net purchases of this asset type amounted to €20.3 billion in 2019, down -12% on 2018.

The total amount of assets held by real estate funds have grown by €614.5 billion (+202%) to €918 billion over the last 11 years.


What is it? 

The ECB’s statistical warehouse publishes eurozone investment fund statistics. Key variables are available at a monthly frequency, while more details are provided quarterly. 

Why it matters

Eurozone real estate funds were identified by the European Securities and Markets Authority as particularly susceptible to liquidity mismatch risk. The watchdog found that while only 4% of the net asset value of real estate portfolios could be liquidated over a one-month time horizon, 16% could be redeemed by investors.

To close this gap, real estate funds can bar investors from being able to cash out over short time horizons or increase the share of easy-to-sell assets they hold. Perhaps the growing share of fund portfolios allocated to equities reflects efforts to ensure they have enough liquid assets on hand to satisfy redemption requests in a market panic.

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