High returns have attracted strong inflows to the non-domestic open-ended fund, which – against the sector trend – risked taking in more cash than it could invest
KanAm has asked its distribution partners to stop selling shares in its KanAm grundinvest Fonds as the German fund manager is struggling to invest the money.
In a letter sent to the fund’s distribution partners, KanAm called for the temporary cash stop, saying the success of its fund depended on liquidity control. “We want to improve property performance through a lower cash quote,” Hans-Joachim Kleinert, a managing director at KanAm, said. “The liquidity is sufficient for the next two to three months.”
Newer funds from managers such as WestInvest and SEB have a cash-call strategy in place for specific acquisitions, but this is the first time a German fund manager has called for a halt on this scale.
KanAm is among the more successful funds in a sector that has suffered outflows due to poor performance and bribery allegations. KanAm received €868m in the first half of 2005, while the sector experienced a €475m net outflow. KanAm’s popularity is due to the fact that it has delivered high returns and holds only non-German assets; domestic property has dragged down other funds’ returns. KanAm’s recent acquisitions include the Néo office building in Paris for €300m.
KanAm is not the first open-ended fund manager to close a fund to new money. In the UK, UBS Global Asset Management closed its £1.7bn UK open-ended Triton fund for an indefinite period, to protect investors’ returns from the potential dilutive effects of cash and valuation lags. It said it would not be able to source enough product in today’s investment climate.
