The German Investment Act (Investmentgesetz) will be significantly amended this year by two Acts. Both Acts are still in draft form and have not passed parliament yet; the German UCITS IV Implementation Act will align the German Investment Act with the requirements of the UCITS IV Directive (2009/65/EC). Furthermore, the Act to Strengthen Investor Protection and to Improve the Operation of Capital Markets (Gesetz zur Stärkung des Anlegerschutzes und Verbesserung der Funktionsfähigkeit des Kapitalmarktes – AnsFuG) will introduce significant changes to the regulation of German open-ended real estate funds.

In December 2010, the German government published the draft of the UCITS IV Implementation Act which will come into effect on 1 July 2011. The UCITS IV Implementation Act introduces rules on cross-border fund mergers, master-feeder fund structures and the controversially debated management company passport. It might be worth noting that German investment management companies (Kapitalanlagegesellschaften) will be required to produce a "key investor document" (KID) for UCITS funds and for all other regulated public funds as of 1 July 2011.

Earlier last year, in November 2010, the German parliament discussed the AnsFuG, another regulatory initiative. The AnsFuG includes a number of significant regulatory changes which fall outside the scope of any EU regulation. The AnsFuG amends the German Investment Act in respect to open-ended real estate investment funds. The German Investment Act in its current form requires German investment management companies to grant investors of open-ended real estate funds the right to redeem the fund shares on each business day. This has led to problems in the past and resulted in some investment management companies making use of their "emergency right" under the Investment Act and closed the fund (for example; redemptions were not accepted for a specific period of time). The AnsFuG introduces the option of the investment management company to redeem the fund units of open-ended real estate funds only on specific dates (at least once a year). Furthermore, it provides that redemptions exceeding EUR5,000 are only allowed after a two-year holding period. Redemptions exceeding EUR5,000 that are made after two years of investment, but before the fund units were held for three years, are subject to a mandatory redemption discount of 10% of the value of the fund units. If the redemption is made between three and four years of investment, this redemption discount is 5%. Only after holding an open-ended real estate fund for at least four years, an investor will have the right to fully benefit from a redemption of the units. Market participants are of the opinion that this will have a negative impact on the market for open-ended real estate funds in Germany.