Types of Investment Vehicles:

Real Estate Funds: Open vs. Closed - Find the Right Fit for Your Portfolio! Explore yields, risks, costs, and alternatives to make informed decisions!

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2025 September 14 . 6:56 PM

2 min read

Types of Investment Vehicles:

In the world of investing, real estate has long been a popular choice for those seeking steady returns and capital growth. This article will delve into the various ways one can invest in real estate, focusing on open and closed funds, Real Estate Exchange-Traded Funds (ETFs), and crowdfunding.

Firstly, let's discuss open real estate funds. These investment vehicles are traded on the stock exchange and can be purchased through a deposit. The fund manager takes care of the investment of the collected money, typically spread across various projects such as industrial halls, office high-rises, and more. Open-ended real estate funds often charge issue surcharges of 5-6% of the investment amount. One notable advantage of open-ended funds is their relative safety within the real estate investment segment, as they diversify your invested money and reduce risk.

On the other hand, closed real estate funds have a fixed term in which you cannot sell shares. These funds often involve your money flowing into only a few real estate or a single project. If a project in a closed-ended real estate fund fails, your money is lost. Closed-end funds may charge issue surcharges of 5-8%.

For those who prefer a more diversified European real estate investment, funds like DWS Grundbesitz Global and Deka-ImmobilienEuropa are worth considering. DWS Grundbesitz Global has a Total Expense Ratio (TER) of 1.07%, while Deka-ImmobilienEuropa has a TER of 0.96%. UniImmoDeutschland, one of the most popular German funds, also falls under this category with a TER of 0.93%.

For those seeking global exposure, Real Estate ETFs provide an opportunity to invest indirectly in real estate by investing in publicly traded real estate companies. Notable ETFs include the iShares European Property Yield UCITS ETF, VanEck Global Real Estate UCITS ETF, Global X SuperDividend REIT ETF, and iShares Mortgage Real Estate ETF. These ETFs often include Realty Income, Welltower, and Digital Realty Trust among their important REITs.

However, it's essential to note that Real Estate ETFs focus on a single sector and carry a risk of losing money. Investing in speculative real estate funds carries a higher risk, but also offers correspondingly higher return opportunities.

Lastly, crowdfunding allows for investing specifically in real estate projects with lower minimum investments and shorter time frames compared to closed-end real estate funds. While this method offers greater accessibility, it also comes with a higher risk. If a project fails, there's a risk of losing your entire investment.

In conclusion, real estate investments offer a variety of options for investors, each with its own set of risks and rewards. Whether you choose open or closed funds, Real Estate ETFs, or crowdfunding, it's crucial to understand the nature of your investment and its associated risks. As with any investment, due diligence and a well-diversified portfolio are key to long-term success.