At the end of July 2023, the total NAV of Croatian mutual funds amounted to EUR 2.07bn, representing a decrease of 7.7% YoY, and an increase of 2.0% MoM. Compared to its pre-pandemic all-time high, this is a reduction of 33.2%.

Recently, The Croatian Financial Services Supervisory Agency, HANFA, published its latest monthly report on the changes and developments recorded by the Croatian capital markets, including the data for the Croatian mutual funds. According to the report, the NAV of the Croatian mutual funds at the end of July 2023 amounted to EUR 2.07bn, which is an increase of 2.0% MoM, but a decrease of 7% YoY.

Taking a closer look at the asset holdings of the funds, on a yearly basis, we have a pretty mixed bag, with both increases and decreases recorded, depending on the category. The largest absolute increase was recorded by shares, which grew by EUR 66.8m, or 24.3%, followed by bonds, with an increase of EUR 15.4m, or 1.2%. On the other hand, the largest by far decrease was recorded by deposits and cash, which declined by EUR 292.9m, or 58.2% YoY, followed by money market holdings, which decreased by EUR 11m, or 29.5% YoY. Here we can see the effect of a less restrictive (as compared to the pension funds) investment policy, but also the perceived improvement in the market conditions and sentiment. As such, a switch from lower yielding but also lower risk holdings (deposits & cash, money market) to higher risk, but also higher return assets such as bonds (relatively) but especially shares, is to be expected.

Turning our attention to the monthly data, the largest absolute increase was recorded by bonds, which grew by EUR 48.2m, or 3.9% YoY, followed by shares at EUR 13m, or 4%, while other assets which yielded positive returns remained roughly the same. On the flip side, deposits, and cash recorded a decrease on the MoM basis as well, declining by EUR 19m, or 8.3% MoM, followed by receivables, which decreased by EUR 7.3m, or 38%.

Total assets of Croatian mutual funds (2015 – July 2023, EURm)

Source: HANFA, InterCapital Research

Of course, besides the changes in the inherent value of the underlying assets of these funds, contributions and redemptions can also influence the NAV. In July, the net contributions to the funds amounted to EUR 24.7m. However, this was primarily due to the net contributions of the Other funds’ category, which grew by EUR 47.3m, followed by equity funds at EUR 4.5m. On the other hand, bond funds recorded redemptions in the amount of EUR 47.3m, while balanced funds also recorded redemptions, albeit at the lower EUR 3.9m.

In terms of securities and deposits, in total they amounted to EUR 2.01bn in July 2023, representing a MoM increase of EUR 57m, (or 2.9%), and a YoY increase of EUR 48.2m (or 2.5%). Breaking this down further, domestic securities and deposits amounted to EUR 826.3m, and recorded a MoM decrease of 0.1%, or EUR 815k, and a YoY decrease of 30.6%, or EUR 363.8m. On the other hand, foreign securities and deposits amounted to EUR 1.19bn and recorded a MoM increase of 5.1%, or EUR 57.9m, and a YoY increase of 53.2%, or EUR 412m.

Finally, taking a look at the current asset structure of the funds, we can see that bond holdings are still the preferred investment class, accounting for 61.5% of the total assets, an increase of 1.3 p.p. MoM, and 6.3 p.p. YoY. Following them we have shareholdings at 16.4% of the total, an increase of 0.4 p.p. MoM, and 4.4 p.p. YoY, as well as investment funds, which hold 10.1% of the total, and have recorded a 0.1 p.p. decrease MoM, but a 1.2 p.p. increase YoY. On the other hand, deposits and cash recorded a MoM decrease of 1.1 p.p., and a YoY decrease of 11.8 p.p., accounting for 10.1% of the total assets at the end of July 2023.

Current AUM of Croatian mutual funds (July 2023, % of the total)

Source: HANFA, InterCapital Research