German open-end retail real estate funds have reported record inflows this year, helped by the further widening in the spread between government bond yields and returns from the property market, according to data from Scope Analysis.
“The 3.8 percentage-point spread between yields on open-ended real estate funds and German government bonds has very rarely been so wide,” said Frank Netscher, analyst at Scope.
Comparing the average yield of 14 open-end retail real estate funds with the performance of German government bonds over the past 15 years shows there has always been positive differential — an “excess return” or “premium” — in favor of open-end retail real estate funds — and the spread has widened steadily since 2013.
“On the one hand, yields on government bonds have fallen steadily, with the yield on 10-year German bonds in negative territory for much of 2019. On the other hand, yields on open-ended real estate funds have also risen ste
