By the end of February 2024, Croatian mutual funds’ NAV grew by 1% MoM, and 14.6% YoY, recording the largest increase since December 2021. This would mean that the funds’ NAV almost reached EUR 2.4bn, ending February at 2.39bn. Furthermore, if we compare it to the pre-COVID-19 maximum, mutual funds NAV is app. 22.7% lower.
In the latest report on the Croatian mutual funds released by the Croatian Financial Services Supervisory Agency, HANFA, we can see that the Croatian mutual funds recorded continued growth in February 2024. In fact, the mutual funds NAV amounted to EUR 2.39bn, increasing by 1% MoM, and 14.6% YoY, while compared to the pre-COVID-19 maximum, the NAV stands at 22.7% lower levels.
However, this represents a recovery, as the NAV has declined significantly after the start of the war in Ukraine and the subsequent macroeconomic and geopolitical developments. In fact, at one point the NAV was 36% lower than its pre-pandemic high.
To understand what drove the changes in the NAV in February, one should look at the two drivers of growth, i.e. the change in the value of underlying assets, and the net contributions into the funds. Looking at the net contributions first, during January 2024 they amounted to EUR 51.9m, (January 2023: EUR -26.4m), while on the trailing twelve months basis, they amounted to EUR 156.8m (January 2023 TTM: EUR -453.6m). In other words, as there was a large cash outflow in the same period last year, positive net inflows started to be recorded in April 2023, and have been recorded ever since.
This would mean that on a MoM basis, net contributions were actually the only driver of growth, as the MoM 1% increase (or EUR 23.2m) in absolute amounts, was lower than the EUR 51.9m of net contributions. On the other hand, on the YoY basis, net contributions constituted app. 51% of the growth in NAV.
Net contributions of the Croatian mutual funds (January 2021 – February 2024, EURm)
Source: HANFA, InterCapital Research
Moving on to the asset classes themselves, on the MoM basis, bonds recorded the largest change at EUR 31.7m, or 2.3%, followed by shares at EUR 15.2m, or 4%, and the money market holdings, at EUR 4.8m, or 8%. On the other hand, deposits and cash declined by EUR 6.96m, or 2%, while receivables decreased by EUR 6.95m, or 26%.
Meanwhile, on the YoY basis, the largest increase was recorded by bonds, at EUR 161.3m, or 12.9%, followed by shares at 85.5m, or 27.6%, and deposits and cash, at EUR 38.9m, or 12.9%. Receivables and investment funds also recorded increases, at EUR 15m and EUR 12.9m, respectively.
Total assets of the Croatian mutual funds (January 2015 – February 2024, EURm)
Source: HANFA, InterCapital Research
Looking at the current asset structure of the funds, bonds still make up the largest percentage, at 58%, representing an increase of 0.4 p.p. MoM, but a decrease of 1.13 p.p. YoY. Next up, we have shares at 16.2%, with growth of 0.37 p.p. MoM, and 1.59 p.p. YoY, as well as deposits and cash at 13.9%, with decreases of 0.51 p.p. MoM, and 0.26 p.p. YoY. One other noteworthy category to mention is the investment funds, which held 8.3% of the total, and which have decreased by 0.11 p.p. MoM, and 0.65 p.p. YoY.
Current AUM of Croatian mutual funds (% of the total, February 2024)
Source: HANFA, InterCapital Research
As we can see, there is still demand present for the Croatian mutual funds, and the majority of investments are still made into bonds, which given the current interest rates and yields on said bonds, makes a lot of sense. The mutual funds themselves have been on a path to recovery for a while now, and barring extraordinary events in the coming period, this development could continue.
