By the end of July 2022, the NAV of Croatian mutual funds decreased by 18.7% YoY but increased by 0.9% on an MoM basis. This would mean that by the end of the month, the NAV amounted to HRK 16.8bn.
The Croatian Agency for the Supervision of Financial Institutions, i.e. HANFA, has published the latest monthly report on the developments in the Croatian financial markets for July 2022. Looking at the performance of the Croatian mutual funds can give us a general sentiment of how the market is doing, as these funds play a major role in the Croatian financial market. As can be seen in the published report, in July 2022, the NAV managed a slight recovery on an MoM basis, increasing by 0.9%, and ending the month at HRK 16.8bn. On the YoY or YTD basis, however, the trend is still negative, with the NAV decreasing by 18.7% and 21.7%, respectively. In fact, looking even further back, the NAV of the mutual funds is 27% lower than it’s pre-pandemic maximum, meaning that it’s still far from recovery or growth.
Looking at the asset types more closely, we can see that several asset classes increased on an MoM basis, while several others decreased. Bond holdings were the ones that experienced the largest absolute increase, growing by HRK 238.6m or 2.6%, followed by investment funds, with HRK 57.6m or 3.9%, and shares, with HRK 44.1m or 2.2%. On the other hand, Deposits and cash was the asset class that declined the most, decreasing HRK 245.8m or 6.1%. The only other asset class to have a noteworthy decrease were the receivables, which declined by HRK 38.2m or 57.5%. Looking at this data would point towards the fact that less risky types of assets, like deposits and cash, are being transferred back into equity and debt holdings (bonds, inv. funds, shares), which would mean that the expectation by the fund managers is that its worth investing into these assets classes, at least currently. This is also supported by the fact that this is the first MoM increase in NAV since October 2021.
However, the net contributions into the funds should also be looked at, as then the whole picture can be considered, i.e. the MoM increase can also be due to the fact that higher contributions were made, and also, that the value of the invested assets (bonds, shares, investment funds, etc.) increased. In July, net contributions into the funds amounted to HRK 65.4m, while the month also recorded some small recovery in value, especially in the international markets, which means that the MoM NAV increase can be attributed both to higher net contributions, as well as an increase in value of investments.
On a YTD basis, however, the decline can be seen in all the asset classes. In fact, the NAV decreased by HRK 4.67bn, or 21.7% since the beginning of the year. This was led by the decrease in bond holdings, which decreased by 2.76bn or 22.5%, followed by deposits and cash, which decreased by HRK 1.06bn, or 22%, share holdings, which decreased by HRK 512.7m or 19.8%, and finally, the money market holdings, which decreased by HRK 203.2m, or 42%. This would mean that despite the MoM increase, the YTD trend is still not that positive.
Meanwhile, looking at the securities and deposits, both domestic and foreign securities and deposits increased in July, on an MoM basis. Domestic securities and deposits increased only slightly, by 0.13% or HRK 11.6m MoM, while on a YTD basis, it decreased by 19% or HRK 2.09bn. Foreign securities and deposits increased by HRK 287.9m, or 5.2% on an MoM basis, while still recording a decrease of HRK 1.7bn, or 23%, on a YTD basis. This would mean that despite the increase on an MoM basis, in total, both domestic and foreign securities and deposits decreased by 20%, or HRK 3.79bn, on a YTD basis.
Looking over to the asset structure of the Croatian mutual funds, bond holdings still make up the largest proportion of total assets, with 55.3% (or HRK 9.55bn), representing an increase of 1.2 p.p. MoM, but a decrease of 0.9 p.p. YTD. Following them, we have deposits and cash, at 21.9% of the total, which is a decrease of 1.5 p.p. MoM, and 0.2 p.p. YTD. Next up, we have shares, with 12% of the total, which is an increase of 0.2 p.p. for both the MoM and YTD numbers. Finally, we have investment funds, whose holdings amounted to 9% of the total, representing an increase of 0.3 p.p. MoM, and 1.6 p.p. YTD.
Croatian mutual funds AUM structure (July 2022, %)
If we were to look at investments into equity in these funds by themselves, 27.8% of the amount is invested into domestic equity. This represents a decrease of 15% YoY, or HRK -1.62bn. The remaining 72.2% is invested into foreign equity, representing a decrease of 27%, or HRK -1.03bn YoY.
Total assets of all Croatian UCITS funds (2015 – July 2022, EURm)
