In the context of Real estate fund refer “discretionary” and “non-discretionary” To the degree of decision -making authority, that the fund manager has in the selection and management of the real estate. This distinction plays an important role, Since it determines, How active or passive a fund manager controls the investments and to what extent investors have an impact on the decisions.
1. Discretionary real estate fund (Discretionary real estate funds)
At a Discretionary real estate funds the fund manager has extensive freedom of choice, how he creates the capital of investors. The fund manager makes decisions about the way, How the capital is invested, and definitely independent, Which properties bought, be sold or renovated.
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Strategy and decision -making power: The fund manager defines the investment strategy and can adapt it depending on the market developments. He usually follows a certain goal, z. B. the acquisition of real estate in certain geographical regions or a certain market segmentation (z. B. Commercial real estate, Residential real estate, Logistical mobil). These decisions are based on market analyzes, Trends and assessment of the manager.
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flexibility: A discretionary real estate fund can also react faster to market changes, Since the fund manager does not have to wait for investors to be approved, To make investments. This is particularly advantageous, When there are opportunities on the market, that have to be used quickly.
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Example: A real estate fund, which invests in office buildings in large European cities, could decide, to invest in the short term in aspiring markets such as the Baltic States, If he expects attractive returns there.
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Risk and reward: The fund manager bears the risk of decisions. When the strategy is implemented well, higher returns can be achieved, Since the manager can use his expertise. On the other hand, bad decisions could lead to losses.
2. Non-discretionary real estate fund (non-discreetly real estate funds)
At a non-discreet real estate funds the fund manager's freedom of choice is severely restricted. The investors largely keep control of the decisions made. The fund manager usually only acts as Administrator, of the investments based on the instructions or permits from investors.
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Strategy and decision -making power: In a non-discretionary fund, investors or an investment committee give the fund manager clear instructions, How the capital should be created. For example, investors can determine exactly, In what type of real estate is to be invested, or even, in which geographical regions of the funds should work.
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Role of the fund manager: The fund manager has the task, to implement the instructions of the investors, without making decisions independently. That means, that the fund manager has no flexibility, To react quickly to market opportunities or risks. Every investment or transaction must be approved by the investors.
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Example: A real estate fund, Define with the investor, that investments can only be made in new buildings of residential properties in Germany, and the fund manager must adhere to these requirements precisely. The fund manager could only work for specific inquiries or to approved property purchases and sales.
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Risk and reward: In a non-discreet fund, investors have more control, but also more responsibility, Since they directly influence the strategies and decisions. The risk is more with the investors, Since you are responsible for the strategic decisions.
Summary of the differences
| feature | Discretionary real estate fund | Non-discretionary real estate fund |
|---|---|---|
| Freedom of choice of the manager | High freedom of choice for the fund manager | Low freedom of choice for the fund manager |
| strategy | Is determined and adjusted by the fund manager | Is determined and checked by the investors |
| flexibility | High flexibility, To react to market changes | Low flexibility, Investments must be approved |
| Risk distribution | The risk lies more with the fund manager | The risk is more with the investors |
| Example | The fund manager decides, Which properties are invested in and when they are bought or sold. | Determine the investors, Which properties are bought or sold, and the fund manager implements this. |
Conclusion
The choice between one discretionary and one non-discretionary The real estate fund depends on the preferences and goals of the investor. A Discretiones Fonds offers more potential for active administration and a flexible reaction to opportunities and risks, While a Non-discretionary funds gives investors more control over the investment decisions, But also greater responsibility and possibly less flexibility means.
