By the end of August 2022, the NAV of the Croatian mutual funds remained at roughly the same level MoM, amounting to HRK 16.84bn. Meanwhile, on a YTD basis, the NAV decreased by 21.7%, while compared to its pre-COVID-19 maximum, it declined by 27%.
The Croatian Agency for the Supervision of Financial Institutions (HANFA) has published its latest monthly report on the changes recorded by the Croatian financial markets, ending in August 2022. The current situation in the equity and bond markets across the world, but especially in Europe and the US is extremely volatile due to the negative macroeconomic outlook as well as the potential for further escalation in the war in Ukraine. Combined with the strong inflationary pressures, this is having a strong impact on the capital markets around the world. As Croatian mutual funds have a crucial role in the Croatian capital markets, how these factors influence and guide their decision can give us an overall insight into how the market is doing.
At the end of August 2022, the NAV of Croatian mutual funds amounted to HRK 16.8bn, representing roughly the same levels MoM, but a decrease of 21.7% YTD, and 20.4% YoY. This would technically mean that for the last 2 months, the NAV did not record declines, which compared to the first 6 months of the year, can be seen as a slowdown in the trend. Even so, the NAV of the mutual funds is 27% lower than its pre-COVID-19 maximum, and given the current situation, is unlikely to reach those levels soon.
Delving deeper into the asset types of the funds, on an MoM basis, deposits and cash recorded growth of 2.1% (or HRK 80.7m), while bonds increased by 0.5% (or HRK 43.4m). On the other hand, shares decreased by 3.9% (or HRK 80.5m), investment funds decreased by 2.8% (or HRK 44.1m), and money market holdings decreased by 10.8% (or HRK 30.3m). This would roughly mean that even though there were some changes in the value of the assets themselves (especially shares), August was more of a month when investments were shifted from one type of asset class to another. In fact, the growth in both deposits and cash and bond holdings, while the simultaneous decrease in shares, investment funds and the money market, is the typical type of indication that investments are moved from more risky types of assets to less risky, a trend that we have witnessed all year long. Furthermore, August recorded increased investments into these funds, with net contributions into the funds amounting to HRK 158.5m.
On a YTD basis, however, the story is slightly different. Bonds holdings decreased the most, by HRK 2.7bn (or -22%), deposits and cash decreased by HRK 985.8m (or -20.3%) shares decreased by HRK 593.2m (or -23%), the money market holdings decreased by HRK 233.5m (or 48.2%). Looking at it this way, the decrease in NAV is more driven by the loss of value in these assets, which again, is expected in the current climate, but also the higher amount of redemptions of stakes in these funds by clients.
Meanwhile, looking at the domestic and foreign securities and deposits, in total, they amounted to HRK 14.6bn in August 2022, representing a decrease of HRK 162.8m or 1.1% MoM, and HRK 3.96bn or -21% YTD. Of this, domestic securities and deposits amounted to HRK 8.74bn, representing 60% of the total, while foreign securities and deposits amounted to HRK 5.86bn, representing the remaining 40%.
Croatian mutual funds AUM structure (August 2022, %)
When it comes to the asset structure of the Croatian mutual funds, bonds still account for the vast majority of holdings, at 55.6% of the total (or HRK 9.59bn), which is an increase of 0.3 p.p. MoM, but a decrease of 0.6 p.p. YoY. Following them, we have deposits and cash, which account for 22.4% of the total, which is an increase of 0.5 p.p. MoM, and 0.3 p.p. YoY, and shares, which account for 11.5% of the total (or HRK 1.99bn), representing a decrease of 0.5 p.p. MoM, and 0.3 p.p. YTD.
Total assets of all Croatian UCITS funds (2015 – August 2022, EURm)
