Ship funds

Ship funds are part of the grey capital market. These are closed-end funds through which capital is raised for the construction or maintenance of merchant ships. With a ship fund, investors invest primarily in the acquisition and operation of merchant ships. The profits of the funds are earned either by selling the ships to shipping companies or by leasing them to shipping companies. The success of the respective funds thus depends on whether the shipping companies can meet their agreed payment obligations in the medium term.

Speculative form of investment

Ship funds are traded on the grey capital market. This means they are not subject to any or only very sparse state regulations. For investors, the possibility of a higher return also means a very high risk of loss. Investment in ship funds is very uncertain due to the many unknowns such as market development or the corporate development of the shipping companies. This is why ship funds can be considered a speculative investment.

In times of high demand for merchant ships, ship funds can bring tax advantages in addition to a high return, especially for investors with large capital, since the profits can be determined on a flat-rate basis via tonnage tax. Instead of the actual profit, a standardised calculated profit is declared for tax purposes. Read more about the tonnage tax below.

Long maturities

Ship funds are usually a medium- to long-term investment. Investors must therefore expect maturities of between ten and 25 years. Since ship funds are predominantly closed-end funds, investors are usually forced to hold their shares until the end of the term.

Early exit is difficult

As with all closed-end funds, the premature sale of ship funds is not envisaged. It is therefore very difficult for investors to sell their units before the end of the term. One possibility is the so-called "secondary market" for closed-end funds.

However, providers in this segment are few and far between because the risk of buying up shares in closed-end funds is very high for them. Among the providers on the secondary market, a distinction can be made between independent platforms and initiator-dependent platforms like exness with its CFDs.

Anyone wishing to sell a closed-end ship fund should inform themselves in detail about the tax consequences beforehand. Often, possible sales are also excluded or regulated in the shareholder agreement.

It is also very likely that the seller will not be released from all obligations by the sale of the fund.

Closed-end funds

In contrast to open-end funds, where investors can sell their units at any time, investors in closed-end funds must hold their units until the end of the term.

Only then are the profits distributed to the investors. However, the obligation to hold the shares in the closed-end fund means that investors also run the high risk that they will end up with a loss-making transaction, where they even have to pay on top.