DWS curbs withdrawals from ImmoFlex special mandate
DWS has discontinued redemptions of shares in its €101.5m ImmoFlex mandate until further notice, highlighting extensions of redemption suspensions and liquidations that have plagued the German property fund industry – now having knock-on effects to multi-manager products.
“Eight open property funds in the German market have announced their liquidation, while six more affected by the suspension of redemptions have announced an extension of their withdrawal suspensions,” said the retail asset management unit of Deutsche Bank today in an announcement.
The DWS ImmoFlex wealth management mandate had exposure to 10 property funds, and DWS said it had invested a large part of its assets into open real estate funds whose redemptions were suspended, and where DWS said this state of affairs was expected to continue.
“Due to the continuing suspension of redemptions the liquidity conditions of DWS ImmoFlex Vermögensmandat are no longer sufficient to honor all withdrawal requests,” DWS said.
It added that honouring requests would lead to a marked deterioration of the portfolio quality and risk structure in the foreseeable future. The interests of remaining investors would be compromised to a great degree, “and the equal treatment of all investors could not be guaranteed,” DWS said.
The move has echoes of problems hitting the alternatives industry in 2008/2009, when various funds curbed redemptions, which led investors in those funds to stem outflows from their own products.
This angered end-clients intensely at first, however as time passed managers were able to justify their actions by citing extreme market conditions and – as in the case of DWS – their legal obligation to treat all investors in a fund, both remaining and redeeming, in an equitable manner.
DWS emphasised the suspension would not, per se, have any negative effect on the retention of worth in the fund.
The product is invested across more than 20 countries and about 500 pieces of underlying property, DWS said.
DWS has announced it will liquidate db Immoflex property fund of funds after five of the real estate funds it invested in are themselves shutting down.