Today we are bringing you our overview of the performance of the Croatian and Slovenian mutual funds in the recent period, ending in September 2024.
Both Croatian and Slovenian mutual funds have recorded almost consistent expansion for more than a year now. This begs the question, which one performed better? To determine this, one has to define what “performing better” even means. It could mean the funds that had higher inflows, faster subscriber growth, or most importantly, the best returns.
On this last metric, it is unfortunately harder to compare the performance of Slovenian and Croatian mutual funds, as most of the assets in Slovenia are invested into equity, while equity accounts for only 17% of investments in Croatia.
Even so, let’s get into the numbers.
Croatia
In Croatia, the mutual funds recorded a NAV of EUR 2.96bn in September 2024, representing an increase of 2.3% MoM, and a much more impressive 44% YoY. This would mean that the recovery in the mutual funds, which suffered greatly during COVID-19 has largely been accomplished. In fact, the fund’s NAV is only 4% lower than its pre-COVID-19 max, further supporting this claim.
Total assets of Croatian mutual funds (January 2015 – September 2024, EURm)
Source: HANFA, InterCapital Research
Breaking this down by asset type, the largest MoM increase was recorded by the money market as well as bond holdings, which grew by 16% (or EUR 40.4m) and 1.4% (or EUR 20.9m), respectively. Most of the other asset types also recorded growth.
The story gets more interesting on a yearly basis. The largest increase here was recorded by money market holdings, which grew by over 7x YoY, or EUR 256m, followed by deposits and cash at a 112% increase, or EUR 241m, bonds, at an increase of 17%, or EUR 221m, and lastly, shares, with an increase of 45%, or EUR 157.7m.
To determine whether this growth came from asset value appreciation or not, one should take a look at the net contributions to the funds.
Net contributions into Croatian mutual funds (January 2021 – September 2024, EURm)
Source: HANFA, InterCapital Research
Net contributions in 2024 have been stable, ranging between EUR 50m and EUR 100m each month. In September, they amounted to EUR 55.6m, while on the trailing twelve-month basis ending in September, they amounted to EUR 754.4m. In other words, net contributions accounted for 84% of the increase in NAV both on the MoM and annual basis. No positive news thus far for the Croatian mutual funds.
The reason for this can be attributed to asset-type investments.
Current AUM of Croatian mutual funds (% of the total, September 2024)
Source: HANFA, InterCapital Research
As we can see, app. half of the investments in mutual funds are made into bonds, followed by a 17% investment into shares, a 15% investment into deposits, a 10% investment into money market holdings, and a 7.5% investment into investment funds. While for the most part, these asset classes have appreciated in value, the returns were still quite low, as evidenced by the low asset value appreciation stemming from these assets.
Slovenia
As mentioned before, Slovenia’s most common mutual fund investments are equity, which accounts for 77% of all investments. The total NAV amounted to EUR 5.81bn in September 2024, growing by 1.1% MoM and over 30% YoY.
Looking at the performance of the assets in the funds, the largest MoM increase was expectedly recorded by shares, which grew by EUR 30.6m, or 0.7% MoM, followed by bonds at an increase of EUR 14.3m, or 1.9%. Other asset types remained roughly the same.
Total assets of Slovenian mutual funds (June 2007 – September 2024, EURbn)
Source: ATVP, InterCapital Research
Of course, net contributions also played a role in Slovenia, although to a much lesser amount. In September, they amounted to EUR 25.2m, representing app. 38% of the MoM increase in NAV, while on the TTM basis ending in September, they amounted to EUR 490m, representing app. 36% of the overall NAV growth.
Net contributions to the Slovenian mutual funds (January 2016 – September 2024, EURm)
Source: ATVP, InterCapital Research
As we can see, there are some similarities, but many more differences between the mutual funds of both countries. While Croatia mutual funds are more traditional with higher investments into less risky funds, they’re also more dependent on net inflows to keep the NAV growing.
Slovenian mutual funds, on the other hand, are much less dependent on net contributions to keep the NAV expanding. The primary driver of growth is the appreciation of the value of the underlying assets. As such, the strategy of prioritizing equity investments is a good one, especially over a longer time period.
In the coming period, it is more likely that the Slovenian mutual funds will keep outperforming Croatian mutual funds if no changes to the asset structure and investments are made. The rate cuts we have witnessed and the ones that are expected will negatively impact bonds, deposits, and money market holdings, while positively influencing equity. The election of Donald Trump is also expected to reflect positively on equity, as lower regulations and lower taxes as well as the possible end of many conflicts around the world should reflect positively on equity. On other asset types as well, but not to this degree, especially after rate cuts.
