By the end of January 2022, the NAV of Croatian UCITS funds stood at HRK 21.1bn, an increase of 13.7% YoY and MOM decrease of 2%.
The Croatian Agency for the Supervision of Financial Institutions (HANFA) has published its monthly report on the changes in the financial markets. In it, we can see that the Croatian mutual (UCITS) funds had a total NAV of HRK 21.1bn in January. This represents a decrease of 2% MoM, and an increase of 13.7% YoY. Considering how large of a role these funds play in the Croatian capital market, it is important to have an idea of how well they performed.
The 2% decrease MoM can be attributed to several factors. The main one was the decrease in bond holdings, which declined by -3.1% MoM (or HRK 383.7m), followed by a decrease in the money market, which decreased by -12.1% MoM (or HRK 58.8m). Now this change can be attributed to the perception of rate hikes on bonds. With America’s FED already planning several rate hikes in 2022 to combat inflation, the ECB will also have to address the issue of rising consumer prices in some way. However, considering the lower rate of inflation in the EU (around 5.5%-6% compared to 7.5% in the US), and considering that the inflation in the EU is mainly driven by energy costs, the European Central Banks will surely not raise referent interest rates that much. Still, the uncertainty is there, and the decrease in bond holdings is a result of rising yields and decreasing prices. On the flip side, deposits and cash holdings increased by 2.6% MoM (or HRK 124.8m), holdings in shares increased by 2.8% (or HRK 71.7m), and receivables increased by 681.6% MoM (or HRK 68.3m).
Meanwhile, on a YoY basis, shares had the largest absolute increase, growing by HRK 872.5m (or 49%), followed by investment funds, which increased by HRK 794.7m (or 97%), deposits and cash, which increased by HRK 577.6m (or 13%), and the money market, which grew by HRK 287.8m (or 206%) YoY. At the same time, the only holding which experienced a YoY decrease were the bond holdings, which decreased by HRK 73.5m (or 0.6%) YoY.
Looking over to securities and deposits, both domestic and foreign holdings in this category decreased. Domestic securities and deposits decreased by 1.1% MoM (or HRK 115.9m), while foreign securities decreased by -4% MoM (or HRK 302.8m). This decrease can be indicative of the global sentiment, especially in January when a lot of international companies (especially in the US) experienced decreases due to the uncertainty regarding the aforementioned rate hikes & inflation.
At the same time, the asset structure of the Croatian UCITS funds remains largely unchanged. Bonds still hold the largest share of the assets, with 54.9% of the total. This is a decrease of -1.3 p.p. MoM, and a decrease of -7.6 p.p. YoY. Deposits and cash, which make up 22.9% of the total, have increased by 0.8 p.p. MoM, while remaining at the same level YoY. The 3rd largest asset class, shares, increased by 0.4 p.p. MoM, and 2.9 p.p. YoY. The next asset structure, investment funds, also had the largest relative increase YoY, growing by 3.2%, while remaining at the same level MoM.
Mutual Funds Structure of AUM (January 2022, %)
It should also be noted that domestic equity holdings accounted for 25.7% of total equity holdings, an increase of 29.5% YoY. Meanwhile, foreign equity holdings (which account for the remaining 74.3%) grew by 57.2% YoY. Also, net contributions decreased by HRK 212.1m during the month.
Total assets of all Croatian UCITS funds (2015 – January 2022, EURm)
