fbpx Modifica setari cookieuri

SIMILAR ARTICLES

Key changes in GDP formation structure: Trade surpasses industry. GDP advance on Q1 – maintained at 2.4%, gross

The National Institute of Statistics confirmed the economic growth of 2.4% in gross series and 2.7% in seasonally adjusted series for the first quarter of… Mai mult

Budget implementation: 5-month deficit increased to 3.59%. From where, how much, how

The implementation of the consolidated budget in the first five months of 2020 registered a deficit of RON 38.8 billion (3.59% of GDP), of which… Mai mult

2020 European Innovation Scoreboard: Big problems of Romania, which is by more than 68% behind EU average

Romania remains the weakest innovator in the EU, with a score in last year’s indicator ranking at only 31.6% of the EU’s average performance, according… Mai mult

Four warning signals for Romania in 2020 Convergence Report

According to March 2020 data, the EC Convergence Report for Romania points out that the long-term interest rate for convergence purposes was 1.5 percentage points… Mai mult

Conditions and mechanism for accessing financing from recovery fund: supervision, indicators, approvals, diplomacy

The European Commission is doubling its efforts to show that Europe has learned the lessons of the past and will avoid now, after the “Great… Mai mult

Reversed trend in mutual funds: Romanians invested more money than they withdrew. They look for funds with government bonds

de Adrian N Ionescu , 10.2.2020

Net subscriptions in Romanian mutual funds (the difference between invested and withdrawn amounts) became again positive in 2019 after they had been negative in 2018.

Romanians invested from their savings by RON 1.897 billion more in mutual funds than they withdrew in 2019, according to the data of Fund Managers Association (AAF).

The data show the trend change compared to 2018 when investors had invested by RON 3.5 billion less than they had withdrawn.

In 2017, net subscriptions were also positive, but by more than 7.6 times lower than in 2019.

This trend reversal occurred in the context of increasing financial markets, but also because the consumption pace slowed down and a higher share of Romanians’ savings shifted towards mutual funds. Bank interest rate’s stagnation in deposits encouraged the trend.

Largest subscriptions made in bond funds

The most sought after are the funds with the largest investments in bonds and bank deposits.

Bond funds attracted over 92% of total net subscriptions in 2019, namely RON 1.75 billion.

This type of funds invest mainly in government bonds and have always been the favourite personal investment tool, due to the low market risk.

*

Net subscriptions by various mutual funds (FDI)

Millions RON

FDI bonds and fixed-income investments      Multi-asset FDI

Equity FDI                   FDI – other investments

Multi-asset funds (diversified, many of them also having significant investments in bonds) and investments in shares also registered positive net subscriptions.

*

Causes: Increased savings and unattractive bank interest rates

The evolution of net subscriptions “was mainly due to the stabilization of interest rates in 2019, as previous increases tempered. This evolution has led, to some extent, to the reorientation of savings towards mutual funds, especially that markets registered increases in all categories of asset, from bonds to shares,” explained Horia Braun-Erdei, the executive chairman of Erste Asset management Romania, which manages the largest Romanian mutual funds.

Another main explanation is the increase in savings, in the context of a decrease in the pace of the consumption that was stimulated by the government policy targeting the increase of incomes and fiscal ease.

Saving rate among the population stood at 14.8% for nine months of 2019, up by one percentage point year on year, “an evolution determined by the positive environment in the labour market and the government economic policy”, says Andrei Radulescu, the director of macroeconomic analysis at Banca Transilvania.

The incomes of households then grew faster than expenditures, with 13.6% year/year compared to 12.3% year/year.

Market shares and returns (much) above inflation

Bond funds (especially government bonds) and other fixed-income investments (especially bank deposits), the most preferred of all, have a market share of 68.7% of total assets.

*

Market share of open investment funds

Market shares of various types of mutual funds, Dec 2019

Bond funds

Diversified funds

Equity funds

funds with capital guarantees

absolute return funds

other funds – local*

Funds that are next, classified under “other” category, actually also invest in fixed income tools, but they do not formally fall into this category because they do not meet the corresponding standard investment limits.

Unlike bank deposits, which still remunerate savings below the inflation level, the highest return of a bond fund is 7.32% (OTP Bonds – Class I), and the largest fund of this type has achieved a level of 5.25% (ERSTE Bond Flexible RON, with assets of almost RON 4.24 billion).

The annual inflation rate rose to 4.04%, in December, above the National Bank’s target of 3.5% and its forecast of 3.8% reached in November.

Equity funds also registered the highest gross returns (net as with no fees, but before taxation) in 2019, up to 43%.

Strong results of diversified funds fall between these two categories and defensive ones achieved returns double the inflation (with investments especially in bonds and deposits).

Too little compared to potential

Total net assets of the 83 Romanian mutual funds are of more than RON 24.9 billion at December 31, 2019, by 15.5% more than a year ago. Bond funds cover 70.7% of total net assets.

Assets collected by the 344,495 participants in the mutual funds represent only 2.2% of the gross domestic product, below other countries that started from the same initial point in 1989.

Bank deposits of households amounted to RON 222.4 billion equivalent, of which those in RON covered 59%.

Types of funds

Mutual funds can be:

  • money-market – if they invest mainly in short-term banking instruments and less in bonds;
  • bond funds – if they invest at least 80% of assets in fixed income instruments, especially bonds and no shares;
  • multi-asset (diversified) – if they invest in a portfolio with any instruments in various proportions:
    • a) defensive – with a maximum exposure of 35% on variable income instruments (especially shares);
    • b) balanced – with exposure between 35% and 65% on shares;
    • c) aggressive – minimum 65% in shares;
    • d) flexible – with proportions between 0% and 100% on any type of instrument;
  • equity – if they invest at least 85% in shares.

There are also funds with capital guarantees (letters of guarantee) / protected (by the management approach) and funds with absolute return (which search for investment plans that bring the highest return at a given time).

Mergeți în homepage ›

Publicat la data de 10.2.2020

Lăsați un comentariu


NEWS

Pentagon transforms Campia Turzii unit into a NATO air hub at the Black Sea

A former Soviet airbase in central Romania could become a hub for US Air Force operations in south-eastern Europe, where the Pentagon is seeking to… Mai mult

Nuclearelectrica shareholders approved to terminate negotiations with Chinese for building reactors 3 and 4 from Cernavoda

Nuclearelectrica's Board of Directors has been mandated to initiate proceedings to terminate negotiations with China General Nuclear Power Group (CGN), as well as legal effects… Mai mult

Renault holds expansion of its plant in Romania, 15,000 jobs cancelled at global level

"Putting capacity growth projects planned in Morocco and Romania on hold" - is one of the measures included in the draft plan of Renault Group… Mai mult

Romania is a net importer of electricity in 2020 as well

Romania imported an amount of electricity of almost 796 GWh in the first month of this year, by more than 36% above what it exported… Mai mult

Shareholders of Galati steel plant promise investments of one billion euros

GFG Alliance has committed to invest one billion euros to upgrade Galati steel plant in order to reduce emissions and increase production. Another EUR 1… Mai mult

Transport Ministry announces it has sent to Brussels the financing request for Sibiu - Pitesti highway

The Transport Ministry, as the Intermediate Body in Transport, approved the financing request for the project "Construction of Sibiu - Pitesti highway", Sections 1, 4… Mai mult

Romania and Juncker Plan: EUR 720 million attracted, of which 35% by Transgaz for BRUA

(The map of investment financed through Juncker Plan, by GDP share. Darker colours mean higher shares) The operator of national natural gas pipelines, Transgaz (TGN)… Mai mult

Top 3 reasons why young people leave Romania

Lack of trust in authorities, corruption and low living standards are the main reasons why young people leave Romania. The data is part of a… Mai mult

IMM Invest Romania – program implementing rules have been published

The Ministry of Public Finance announces that it has issued the methodological norms for the implementation of the Program for supporting small and medium-sized enterprises… Mai mult

Pollution import and car park expansion: comparisons with the other EU states

Romania is the EU country with the fewest cars in terms of the number of inhabitants, according to data recently published by Eurostat. We appear… Mai mult

Government is trying to save budget deficit: reductions in public administration system, cancellation of bonus for harmful conditions, excise duty on soft drinks

The Government is preparing the public for the first measures aimed at avoiding the budget slippage, which would be applied by the PSD-ALDE government. News… Mai mult

Laura Codruta Kovesi remains alone in the race for European Chief Prosecutor

French Prosecutor Jean-Francois Bohnert will be appointed as head of the European Financial Prosecutor's Office, a position for which he was heard on Thursday, 11… Mai mult

Romania - EU country with highest risk of dying in a road accident, Bulgaria is quickly decreasing number of victims since it built motorways

Romania recorded the highest road deaths in the EU also last year, with 96 deaths per one million inhabitants in 2018, almost double the EU… Mai mult

Latest developments in progress at Health Ministry: Differentiated wages based on performance, competitions organised at a regional level not by hospitals

Sorina Pintea announced on Thursday further new changes that will be brought to the functioning of the health care system, including new rules for employment… Mai mult

ANAF changes selection procedure for liquidators. Main changes

The new order on approval and selection procedures for insolvency practitioners is an important step to a very good direction, industry experts say. ANAF is… Mai mult

Romania loses competition for a seat at UN Security Council. MAE Excuse: Campaign started too late

Romania lost to Estonia in the final vote to get the non-permanent member position within the UN Security Council for the period 2020-2021. On Friday,… Mai mult