At the end of February 2022, the NAV of Croatian Mandatory Pension Funds stood at HRK 129.9bn (or EUR 17.3bn), growing by 7.1% YoY.
The Croatian Financial Services Supervisory Agency has published its monthly report on the changes in the Croatian mandatory pension funds. With the funds holding a significant amount of investments in the Croatian capital market, seeing how their AUM developed over time can give us an overview of the trends that are happening and might happen on the whole financial market in Croatia.
The NAV of the pension funds amounted to HRK 129.9bn (or EUR 17.3bn) in February 2022, representing an increase of 7.1% YoY, but a decrease of -2.4% MoM. Meanwhile, net contributions into these funds amounted to HRK 634.3m in February, or HRK 1.25bn since the beginning of the year.
Mandatory Pension Funds AUM Structure Change (January 2018 – February 2022, %)
Looking over at the asset structure of the pension funds, bonds holdings continue to amount to the majority of the total, at 64.3% (or HRK 83.6bn). This represents a decrease of -2.2 p.p. YoY, but an increase of 2.3 p.p. MoM. At the same time, the 2nd largest asset class, shares, amounted to 20.4% of the total (or HRK 26.5bn), an increase of 1.9 p.p. YoY, but a decrease of 1.08 p.p. MoM. The next largest asset class, inv. funds amounted to 11.9% of the total (or HRK 15.4bn) and experienced an increase of 0.77 p.p. MoM and 2.5 p.p. YoY. These changes on an MoM basis can be attributed to the Russian-Ukrainian war, as the pension funds are much more risk-averse than individual investors, and as such, they have increased their holdings in lower-risk assets (bonds) while lowering their holdings in higher-risk assets (shares, inv. funds). However, this does not stop the trend that has been recorded over the last year, with bond holdings decreasing and shares and inv. funds, among others, increasing. If the uncertainty and the escalation of conflict continue, it is expected that there would be more investments made towards bonds, or even a reduction of investments across all classes as investing appears more “risky”.
This is also evident if we look at the changes in absolute amounts, as deposits and cash decreased the most, by HRK -2.33bn, followed by shares with HRK -2.07bn, while on the flip side, bonds increased by HRK 1.04bn.
Current Mandatory Pension Funds AUM (February 2022, %)
Dividing the holdings into domestic and foreign holdings, we can see that domestic bond holdings accounted for 94.9% of total bond holdings. At the same time, domestic equity holdings accounted for 59.8% of total equity holdings in February 2022.