By the end of August 2023, the NAV of the Croatian mandatory pension funds increased by 0.7% MoM, 9.3% YoY, and 10% YTD, amounting to EUR 19.3bn.

According to the latest report by the Croatian Financial Services Supervisory Agency, i.e. HANFA, the Croatian pension funds have recorded a positive trend of growth in 2023, despite the challenging macroeconomic environment, including the high inflation rates. As the pension funds are the largest institutional investors in Croatia, how they develop over time and the challenges they face could be to some degree used to gauge the overall sentiment on the capital market. In the report, we can see that the NAV of the Croatian pension funds increased by 0.7% MoM, 9.3% YoY, and 10% YTD, amounting to EUR 19.3bn. Furthermore, the net contributions into the funds are exepctedly increasing, with EUR 108.6m contributed in August 2023 alone, and EUR 814.3m contributed since the beginning of the year.

Croatian mandatory pension funds AUM structure change (January 2018 – August 2023, EURm)

Source: HANFA, InterCapital Research

In terms of the asset structure, on a monthly basis, the largest increase was recorded by bonds, which increased by EUR 131.6m, or 1.1%. Following them we have shares at EUR 35m, or 0.8%, while on the other hand, receivables decreased the most, by EUR 29.7m, or 1.3%, followed by the money market holdings at EUR 14.2m, or 5.5%, and other assets, at EUR 7.6m, or 30%.

Meanwhile, on the YoY basis, the largest increase was recorded by shares, which grew by EUR 671.8m, or 18.7%, followed by bonds, which increased by EUR 539.2m, or 4.7%, and the money market, which increased by EUR 106.6m, or 76.4%. On the other hand, other assets decreased the most, losing EUR 144.4m, or 89.1% of their holding value.

Of course, large increases in both bond and share holdings are expected, as these are two of the largest asset types being held. In fact, bonds account for 62% of the total assets, an increase of 0.28 p.p. MoM, but a decrease of 2.7 p.p. YoY. Meanwhile, shares hold 22.1% of the total, remaining roughly unchanged MoM, but increasing by 1.75 p.p. YoY. Lastly, investment funds hold 11.3% of the total, decreasing by 0.23 p.p. MoM, and increasing by 0.63 p.p. YoY.

Current AUM of Croatian mandatory pension funds (August 2023, % of the total)

Source: HANFA, InterCapital Research