Brussels to look into EU realty funds

BRUSSELS (Reuters) – The European Commission will look at how consumers could have more choice in tapping fast-growing funds that invest in property, the EU’s executive body said yesterday. Europe’s unlisted property funds for institutional investors total about -400 billion euros, according to European industry group Investors in Non-Listed Real Estate Vehicles (INREV). EU Internal Market Commissioner Charlie McCreevy is setting up a study group to advise him on how to improve the European market for open-ended real estate funds. «Open-ended real estate funds are widely available to retail investors in several member states. But they are locked up in their national markets – they cannot be sold across borders,» McCreevy said in a statement. «I am creating this expert group to look at this situation and to advise on whether there is any clear-cut case for EU action in this area,» McCreevy added. Open-ended funds, known as unit trusts in Britain or mutual funds in the United States, can issue and redeem shares at any time. The group will report in early 2008 and McCreevy said market practitioners and investors who want to be members should contact the European Commission. The European Fund and Asset Management Association (EFAMA) has been lobbying the EU executive for years to include real estate in harmonized pan-EU funds known as UCITS. UCITS, or undertakings in collective investments in transferrable securities, can be sold across the EU. They typically offer stocks and bonds, but real estate, hedge funds and private equity are excluded. Most mutual funds in the EU are UCITS. The Commission is already looking at ways to make UCITS more attractive to consumers, encouraging them to save for a pension. EFAMA Secretary-General Steffen Matthias said it made no sense to exclude real estate funds from UCITS as they were very popular in countries such as Germany and the Netherlands. «In Germany, people switched to real estate funds after the collapse of the Neuer Markt,» he said, referring to the German market for technology stocks that closed after the bubble burst in 2000. «It’s a typical, long-term investment.»

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