By the end of April 2022, the NAV of the Croatian mutual funds decreased by -2.9% MoM, amounting to HRK 17.6bn. This continues the declining trend that started in November, meaning that on a YoY basis, the decrease in NAV amounts to -10.8% YoY.
The Croatian Agency for the Supervision of Financial Institutions (HANFA) has published its latest monthly report on the developments in the financial markets. With the Croatian mutual funds being such key players in the financial market, we decided to bring you an updated overview of their performance. In April 2022, the NAV amounted to HRK 17.6bn, a decrease of -2.9% MoM, and -10.8% YoY. This is also the smallest MoM decline since the Russian invasion of Ukraine, as in February and March the NAV declined by -10% and 4.7% (on an MoM basis), respectively.
Looking at the types of holdings, the largest absolute decrease was experienced by deposits and cash, whose holdings were reduced by HRK -470.6m or -11% MoM, and HRK -1.25bn or -25% YoY. Considering the current uncertainty in the market, and the high inflation rates, different forms of investments are looked for which can „weather the storm“ better.
Next up, we have the bond holdings, whose holdings were reduced by HRK -227.2m (or -2.2% MoM), while on a YoY basis, they decreased by HRK -1.79bn, representing a decrease of -15%. Considering the current high inflation rates and the expected key rate increases, the sell-off is expected. Moving on, the 3rd largest decrease was recorded by share holdings, which lost -4% or HRK -95.6m of its value MoM but are still in the positive on a YoY basis, being higher by HRK 238.2m or 12%.
On the flip side, mutual funds increased their holdings in investment funds by HRK 243.4m (or 17.8% MoM), representing the highest increase of all the holdings. This is also true on a YoY basis, as holdings in inv. funds have increased by HRK 661.7m, or 69% YoY.
Meanwhile, looking at the securities and deposits, domestic securities decreased by -1.4% MoM (or HRK -133.8m), while foreign securities increased only slightly, by 0.15% (or HRK 9.1m). On a YoY basis, however, both the domestic and foreign securities and deposits decreased, with domestic ones losing -14% (or HRK -1.47bn), while foreign securities and deposits lost -4% (or HRK -248.4m) YoY.
Furthermore, taking a look at the asset structure of the mutual funds, bonds still remain the most prominent asset structure, at 55.2%, which represents an increase of 0.4 p.p. MoM, but also a decrease of -2.9 p.p. YoY. The slight increase on an MoM basis can be attributed to the entire NAV declining faster than the bond holdings. Moving on, deposits and cash are the 2nd largest asset holding, with 20.8% of the total, a decrease of -1.9 p.p. MoM and -4 p.p. YoY. Shares, the 3rd largest asset holding, lost -0.1 p.p. MoM, but still gained 2.5 p.p. YoY. Meanwhile, the most significant gain was experienced by the inv. funds, which gained 1.6 p.p. MoM, 4.2 p.p. YoY.
Croatian mutual funds AUM structure (April 2022, %)
It should also be noted that UCITS funds investments in domestic equity, which accounts for 27.3% of total equity holdings, were down by -14% YoY, while investments in foreign equity holdings, which account for the remaining 72.7%, are down by -26% YoY. Finally, net contributions decreased by HRK -256.6m during the month.
Total assets of all Croatian UCITS funds (2015 – April 2022, EURm)
While the decrease in value of equity can be attributed to the current uncertainty and volatility in the world (inflation, the geopolitical situation, etc.), if we look at the YoY data of some of the largest indices, we can see that the aforementioned net contributions decreases also had an influence on the funds, in some cases more some than the decrease of value. This is especially true for domestic equity, with CROBEX10 at the end of April increasing by 8.53% YoY, and 1.53% MoM. Meanwhile, if we looked at some of the largest international indices, FTSE 100 increased by 8.25% YoY, 0.38% MoM, while S&P500 decreased by -1.2% YoY, -8.8% MoM, and finally, DAX, which lost -6.9% of its value YoY, -2.2% MoM. What this can tell us is that the decrease in the value of foreign equity had a more significant influence on the decrease of investments in foreign equity holdings than was the case with domestic equity investments.
Performance of select indices in April 2022, YoY (%)