At the end of February, the NAV of Croatian mutual funds decreased by -10% MoM, amounting to HRK 18.97bn. This also wiped most of the gains on a YoY basis, which now amounts to only a 0.3% gain.
The Croatian Agency for the Supervision of Financial Institutions (HANFA) has published its monthly report on the developments in the financial markets. Since the Croatian mutual funds play a key role in the financial market, we decided to see how they performed. During February, the Croatian mutual funds had a NAV of HRK 18.97bn, a decrease of -10% MoM. This continues the negative trend in 2021, where on a YTD basis, the NAV decreased by -11.8%. Also, compared to its pre-COVID 19 maximum, the NAV is -17.8% lower.
The -10% decrease MoM can be seen across the whole variety of holdings, with bond holdings decreasing the most at HRK -1.2bn (or-10.1%) MoM, followed by deposits and cash, which decreased by HRK -425m (or -8.5%), shares, which decreased by HRK -308m (or -11.6%), and investment funds, which decreased by HRK -129.2m (or -8%) MoM. The only asset class to experience an increase on an MoM basis were receivables, which grew by HRK 305m (or by around 390%). The decrease can most certainly be attributed to the Russian invasion of Ukraine, as well as the escalation that happened during February leading to that development.
Looking at the YoY basis, the NAV still grew slightly, increasing by HRK 51m or 0.3%. Looking at the asset classes, bonds are still the main decliners, losing HRK -1.5bn (or -12%) of their value, followed by deposits and cash, which decreased by HRK -193.6m (or -4%). Other asset classes, even with the short-term shocks caused by the aforementioned war in Ukraine, still increased, with inv. funds leading the way with an increase of HRK 668.3m (or 82%), followed by shares with HRK 489.3m (or 26%), and receivables, which increased by more than 10x (or HRK 355.9m).
One other thing that surely had an influence and will continue having an influence on the mutual fund asset structure developments is the current inflation rate, which the ECB and national central banks will have to deal with at some point, probably by raising interest rates and stopping the quantitative easing.
Meanwhile, looking over to the securities and deposits, both domestic and foreign securities and deposits decreased in February. Domestic securities and deposits decreased by HRK -1.16bn (or -10.6%) MoM, while foreign securities and deposits decreased by HRK -896.2m (or -12.4%) MoM. In total, this led to a decrease in total securities and deposits of HRK 2.05bn, or -11.3% MoM.
At the same time, looking at the asset structure of the mutual funds, bonds still remain the largest asset holding, at 53.9%, a decrease of -1 p.p. MoM and -7.3 p.p. YoY. Following them, we have shares with 11.8%, a decrease of -0.4 p.p. MoM, but an overall increase of 2.5 p.p. YoY. Next up we have investment funds at 7.4%, which remain unchanged MoM but had an increase of 3.4 p.p. YoY. The largest relative increase was experienced by the receivables, which grew by 1.6 p.p. MoM and 1.8 p.p. YoY.
Croatian mutual funds AUM structure (February 2022, %)
It should also be noted that domestic equity, which accounts for 26.3% of total equity holdings, lost 10% of its value YoY, while foreign equity holdings, which account for the remaining 73.7%, lost 23% of their value YoY. Meanwhile, net contributions also decreased by HRK -1.55bn during the month.
Total assets of all Croatian UCITS funds (2015 – February 2022, EURm)