Third in a four-part series on European Investment Issues.

How are German investment managers rallying in the wake of the open-end fund freeze of last year? Very well, thank you, although reports that the freeze would have no impact on the frothy investment market must be taken with a grain of salt. Dr. Karl-Joseph Hermanns-Engel, managing director of AXA Investment Managers in Cologne, Germany, sees trouble ahead in the perceptions of the market if not in the actual stability of the vehicles themselves. The crisis represented a general market loss of something on the order of 8 billion euros, reports Hermanns-Engel, and a loss for AXA of 300 million euros of its total 1.5 billion in retail funds. The result was a clear crisis of faith in the market, one which still lingers, as well as stepped-up debates over the nature of transparency and standardization. Nevertheless, AXA, which boasts a pan-European investment portfolio of 29 billion euros for global clients, is barreling ahead, as Hermanns-Engel told GlobeSt.com during Mipim in Cannes. The firm is planning rollouts of a variety of funds slated through the end of the year, and perceptions will simply have to catch up with reality, even as that reality changes.

GlobeSt.com: What's the back-story on the crisis?

Hermanns-Engel: Open-end funds in Germany were very successful for 35 years. They were a kind of social exercise to make big investment volumes accessible to small monies. This changed over several decades with the evolution of institutional business generally, and over the past years a lot of institutional investors looking for short-term returns grew in their interest. But open-end funds always target investment in long-term and core or core-plus products. The internal problem of the product was long-term investments and daily availability of the money. So investors can at any moment have their money back. There was a 5% close as a security mechanism. Funds were frozen if they dipped below that, and last year, they did. It was the first time in 35 years we had to face this.