By the end of December 2022, the NAV of Croatian mutual funds lost almost a quarter of its value YoY, decreasing by 24.4% YoY, and 3.2% MoM. In total, the NAV of the funds amounted to EUR 2.16bn.
The Croatian Agency for the Supervision of Financial Institutions, HANFA, has recently released its updated monthly report on the developments and changes that were recorded by the Croatian capital markets. Today we are bringing you an overview of one of the major players in these markets, the Croatian mutual funds. According to the latest data in December 2022 (and thus accordingly, the entire 2022), the NAV of Croatian mutual funds decreased by 24.4% YoY, and 3.2% MoM, amounting to EUR 2.16bn. This would mean that in 2022, the NAV of Croatian mutual funds decreased by almost a quarter YoY. If we were to compare the numbers to the pre-COVID-19 maximum, the situation is even worse, with the NAV decreasing by over 30%.
In terms of the asset changes of the funds, on a monthly basis, the largest absolute decrease was recorded by the money market holdings, which decreased by EUR 30.3m, or 46%, bonds, which declined by EUR 26.3m, or 2%, receivables, which decreased by EUR 18.9m, or 91%, and investment funds, which decreased by EUR 7.7m, or 3.9%. In fact, during the month, no asset class recorded growth, which is evident if we look at the aforementioned 3.2% overall MoM decrease in NAV.
At the same time, on a YoY basis, we have pretty much the same story. All asset classes except one decreased, and that one (receivables) only increased by a tiny bit (EUR 533k). On the other hand, the largest decreases by far were recorded by bond holdings, which decreased by EUR 339.9m, or 21%, deposits and cash, which declined by EUR 269.4m, or 42%, shareholdings, with a decline of EUR 65.8m, or 19%, the money market holdings, which decreased by EUR 28.7m, or 45%, and finally, inv. funds, which declined by EUR 27.2m, or 13%.
Total assets of all Croatian mutual funds (2015 – December 2022, EURm)
Source: HANFA, InterCapital Research
Considering the current macroeconomic and geopolitical situation in Europe, pressure on different asset holdings is to be expected. However, just looking at the change in asset holdings doesn’t give us an entire picture, as we should also look at net contributions into the funds. The reason why is that the decline in value can be both due to a decrease in the inherent value of the assets, but also due to the investors redeeming their stakes in the funds (for example, funds that hold the majority of their assets in bonds), thus driving its value down even further. Looking at the net contributions, in December 2022, they were negative at EUR 277.9m, with the contributions into bond funds declining the most, at EUR -297.6m, while the other fund category increased by EUR 43.9m. This would further show that the decline in NAV was both due to the decline in the asset value as well as the increase in redemptions.
Taking a look at the securities and deposits, on an MoM basis, they decreased by EUR 11m or 4.1%. Of this, both domestic and foreign securities and deposits declined by roughly the same, at EUR 5.45m and EUR 5.57m, respectively. On a YoY basis, they declined by a total of EUR 72.6m, or 22.1%. Of this, domestic securities and deposits decreased by EUR 61.2m, or 31.3%, while foreign securities and deposits declined by EUR 11.4m or 8.6%.
Lastly, looking at the current asset structure of the funds, we can see that the largest share is held by bond holdings, at 59.6%, which is an increase of 1.2 p.p. MoM, and 3.4 p.p. YoY. Following them, we have deposits and cash, which accounted for 17.3% of the total, an increase of 0.6 p.p. MoM, but a decrease of 4.9 p.p. YoY. The only other 2 notable categories are shares, which held 12.8% of the total, an increase of 0.3 p.p. MoM, and 1 p.p. YoY, and investment funds, which held 8.6% of the total, remaining roughly the same MoM, but recording an increase of 1.2 p.p. YoY.
Croatian mutual funds AUM structure (December 2022, %)
Source: HANFA, InterCapital Research