REAL ESTATE INVESTMENT FUNDS UNDER THE LAW ON INVESTMENT FUNDS

At the end of 2005, a new Law on Investment Funds was enacted in order to harmonize national law with the European law in the field of open investment funds and to prepare national fund industry for trans-border service providing. It also regulated new forms of funds. There is a main difference between funds that have public offer and are directed toward wider number of investors, and funds that operate with private offer. Closed fund with legal personality can operate on the basis of public offer only, and these are the only form of fund investment that may legally invest in real estate. On the other hand, open funds that have no legal personality may operate both with private and public offer, and in case of private offer investors have to comply with special criteria. Investors are no longer only institutional; instead a new concept of qualified investor is created, including also physical persons. Diversification of funds and investors necessary invokes research of legal status of investors in different kinds of funds in order to establish benefits and shortcomings of different kinds of investment. The author's intention is to examine characteristics of real estate investment funds, i.e., their establishment and organization, objects of their investment, possible limitations of their portfolio and other particularities that differentiate them from other investment funds. Apart from the provisions of the Law on Investment funds, the article analyses approved prospectuses of individual real estate investment funds in order to determine factual level of investors' protection.