Do open-ended funds still serve Germany’s savers?

German open-ended real estate funds (GOEFs) are under renewed scrutiny. Once the dependable cornerstone of the nation’s retirement saving, they are now confronting heavy outflows and growing investor distrust. Since mid- 2024, withdrawals have exceeded inflows every month, and despite modest valuation adjustments, many funds still appear slow to reflect the steep markdowns seen in prime office markets. That perception of delay has fuelled unease, even if it is partly the price of stability.

A new study from the IREBS Real Estate Academy offers a reminder of the longer view. Professors Tobias Just and Steffen Sebastian, using data from six major funds supplied by Union Investment, find that GOEFs possess the best long-term risk characteristics of any major asset class. Over a 20-year period, their volatility and drawdown risk are lower than both equities and bonds, while their correlation with other assets remains strikingly weak. In a mixed portfolio, that makes them a stabilising anchor rather than a performance engine.

The message from IREBS is clear: GOEFs reward patience, not timing. The study shows that the probability of loss falls sharply with holding period and tends towards zero over time. In contrast, short-term investors face illiquidity and valuation lag, especially in a higher-rate environment. For savers seeking liquidity or quick returns, GOEFs are ill-matched. For those seeking steady compounding and capital preservation, they still serve their purpose.

Union Investment’s chief executive Michael Bütter admits the model must adapt to higher financing costs and stricter transparency expectations. But the basic concept endures. GOEFs remain one of the few regulated, diversified and professionally managed routes into property exposure for retail savers. As Professor Sebastian notes, “open- ended funds are safer than any other asset class in the long term.”

Germany’s ageing savers may have lost some faith, but the arithmetic still argues in favour of patience. The funds’ quiet virtue is not spectacular growth, but endurance — which, in an era of volatility, still remains a scarce and valuable asset.