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.

Get in touch

Like Risk Quantum? Sign up for free to our daily newsletter and check @RiskQuantum for the latest updates.

If you have any thoughts on our latest analysis or want to suggest other ways to present and analyse the data, you can email us.

Tell me more

Liquidity risks acute for popular retail funds – Esma

View all fund stories

  • LinkedIn  
  • Save this article
  • Print this page  

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: