Yes, PR email. From Scope. And I've written about these things before. Liquidity cushions. 'What are they, boss?' Don't you remember? 'Remind me.' They're cushions filled with liquid, Voice, that, uh ... fund managers keep under their desks, for when they want a kip, like. 'Oh, yes. I remember.'
Anyway ...
The large liquidity cushions of open-ended real estate funds have been a burden on returns in recent years. With The Thing crisis, however, the more than EUR 20bn in cash has been an anchor of stability.
Er ... a burden? I don't understand that. 'The cushions are too big, boss. They don't fit under the desks.' Ha! Well, they can let some of the liquid out, can't they? What's the problem? Christ! Honestly. Some of these fund managers don't have two brain cells to rub together.
In recent years, managers of open-ended real estate funds found it hard to ensure liquidity ratios didn't rise too high. They succeeded last year. At the end of 2019, the funds' liquidity had a weighted average of around 20%, almost the same as from a year earlier. Even in the weeks dominated by The Thing, asset managers reported no extraordinary outflows of funds, and many even saw a net inflow (as of 15 April 2020).
Ah, yes ... The Thing. I'm glad that PR people are using my expression for it now.
A major reason consists of the two-year minimum holding period and the one-year notice period introduced in 2013 under the German Investment Code. All investors in funds launched since 2013 fall under these regulations. Meanwhile, for almost all of the older funds, including the heavyweights, more than half of investors are now subject to these regulations. (Note: those that invested in open-ended real estate funds before 22 July 2013 can withdraw up to EUR 30,000 in a half year without giving notice.)
Oh, it's all German stuff. That's okay.
Another reason for the stability in fund flows: the unit values of open-ended real estate funds are less volatile than, for example, equity prices. This is due in part to the conservative methods of German property appraisers. Their valuations are based on sustainable levels, which serve to smoothen out market fluctuations in both directions.
Okay.
Outlook: In the first two months of this year, funds that accepted any investor monies continued to have massive cash inflows. In recent weeks, however, inflows have reduced, and Scope expects the slowdown to continue. As most funds have massive cash balances, liquidity problems are unlikely in the short term. Even so, Scope believes fund managers will hold back from investing in new assets for the time being.
Fair enough.
Christ! 'What?' There's a lot of this. 'Ha! You've done enough, boss. Why don't you write about music?' This is a finance blog, man.
...
Anything else? Audiobooks? I'm not listening to them at the moment. I keep switching between them, but that's not good. It will mess your brain up. Maybe I should stop listening to them altogether.
Uh. Music? I'm ready to record my new demo now. However, there's not much point while we're all on lockdown.
With these four songs ...
This World Don't Mean a Thing
Nothing
And Rain Came Down
Stella
Nothing
And Rain Came Down
Stella
... there would be no stopping me. But it's The Thing, man. The evil Thing. Let's hope it goes away, eh?
...
I went for two walks in the park last week. My only exercise so far. I want to go to Richmond. I can't.
Lockdown must be worse for other people. I mean, I stay in a lot in normal times. Blogging and my music, you dig?
I have noticed more noise in the street though. Which suggests people are going out more in London.
If you look at the Sloop Inn St Ives webcam, you will hardly see anyone around. In full sunshine! In St Ives! It's a crime against Nature, man.
I want to walk on my favourite beach ...
