Croatian Mandatory Pension Funds Asset Structure – November 2020

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

Pension funds could be seen 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. NAV of pension funds has witnessed a steady increase for each consecutive month since April, and as of end November stood at HRK 118.18bn (+2.1% MoM or HRK 2.44bn). Such an increase represents the best monthly performance in 2020. This also represents an increase of 5.1% 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 November net contribution payments amounted to HRK 586.6m, remaining flat compared to the previous month.

Asset Structure of Croatian Mandatory Pension Funds (November 2020)

Source: Croatian Financial Services Supervisory Agency, InterCapital Research

Looking at the asset composition of pension funds, 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 (68.7%) which as of November amounted to HRK 81.47bn (decrease of HRK 206m MoM or 0.3%). Shares come next, with 18% or HRK 21.47bn, representing an increase of as much as 8.4% MoM (or HR 1.67bn). Such a high increase could be attributed to the positive sentiment on both domestic and foreign markets amid encouraging vaccine development.

Unlike Croatian UCITS funds whose majority of equity holdings are foreign, mandatory pension funds have 57.2% (or HRK 12.3bn) of their equity holdings allocated in domestic shares. We note that shares turned green on a YTD basis, with an increase of 8.1%. Of that, domestic shares are slightly down by 0.5% YTD, while foreign shares are up by 22.2% YTD.