Germany has always been an attractive market for distribution of financial products, but never for their creation. Considerable attempts have been made to correct that for both the fund industry and investors. At the end of 2007, the legislature amended the German Investment Act, reviving the German investment stock corporation (InvestmentAG), a success story in the German fund industry and still an underestimated opportunity for others.
For many years, the only alternative for structuring regulated investment funds under German investment law was a contractual mutual investment fund (Sondervermögen) issued by an investment management company (Kapitalanlagegesellschaft – KAG). In other countries with active fund industries, such as the US, Ireland, Luxembourg and the UK, the contract-type investment fund was largely unknown or of secondary importance.
Internationally, the most common form of regulated investment fund has been an investment company with variable capital. So it is not surprising that, beginning...