For today, we decided to present you with an updated asset structure analysis of Croatian Mandatory Pension funds.

Pension funds could be described as the key player on the Croatian capital market, as their current domestic equity holdings account for more than 40% of the free float market cap of ZSE. Therefore, it is particularly interesting to see how they have been affected by the ongoing Covid-19 situation. As the global financial markets, as well as the Croatian capital market, observed a partial rebound in April and the following months, it is worth seeing how Croatian mandatory pension funds performed during that period.

NAV of pension funds has witnessed a steady increase for each consecutive month since April, and as of end July stood at HRK 113.19bn (+0.2% MoM or HRK 272.2m). This also represents an increase of 0.5% YTD.  As a reminder, in March (the worst performing month for almost all asset classes) the pension funds recorded a decrease of 3.3% MoM or HRK 3.76bn. It is also worth adding that in July contribution payments amounted to HRK 749.1m, which is quite above the average contribution usually paid. The increase could mainly be attributed to later payments regarding the grants to preserve jobs given during the lockdown (March & April).

Asset Structure of Croatian Mandatory Pension Funds (July 2020)

Looking at the asset composition of pension funds, it seems that asset managers have not changed significantly their composition, which can be seen in the graph above. Bonds account for the vast majority of total assets (70.6%) which as of July amounted to HRK 80.33bn. Shares come next, with 16.9% or HRK 19.24bn. Unlike Croatian UCITS funds whose majority of equity holdings are foreign, mandatory pension funds have 58.3% (or HRK 11.22bn) of their equity holdings allocated in domestic shares. Note that since the beginning of the year, pension funds have witnessed a decrease of 3.1% in shares.

Total Assets of Croatian Mandatory Pension Funds (2018 – July 2020) (HRK bn)

Source: Croatian Financial Services Supervisory Agency, InterCapital Research