In January 2023, the NAV of the Croatian pension funds amounted to EUR 17.9bn, growing by 2.2% MoM, and 1.2% YoY.
According to the newest report on the Croatian capital markets published by the Croatian Financial Services Supervisory Agency (HANFA), the Croatian pension funds recorded NAV growth of 2.2% MoM, and 1.2% YoY in January 2023. Considering the sheer size of the NAV of Croatian pension funds (standing at EUR 17.9bn in January 2023), seeing how they perform over time can give us a hint of how the overall market is doing as well. At the same time, the net contributions into the funds amounted to EUR 90.1m in January 2023.
Croatian mandatory pension funds AUM structure change (January 2018 – January 2023, EURm)
Source: HANFA, InterCapital Research
Looking at the changes by asset holdings, on a monthly basis, almost all asset holdings recorded growth. In absolute terms, share holdings recorded an increase of EUR 229.5m, or 6.5%, followed by investment funds, which grew by EUR 80.3m, or 4.3%, as well as bond holdings, which increased by EUR 77.6m, or 0.7%. On the other hand, only deposits & cash recorded a decrease, of 0.3% or EUR 2.6m.
Moving on to the YoY basis, the story is a little bit different. In absolute terms, bond holdings lead the way, increasing by EUR 211.2m, or 1.9%, followed by the money market as well as deposits and cash, which grew by EUR 15.9m (+11.3%), and EUR 15.8m (+2%), respectively. On the flip side, investment funds, receivables, and other assets all recorded a decline, decreasing by EUR 27.5m (-0.7%), EUR 24.5m (-1.2%), and EUR 24.2m (-46%), respectively.
The growth on an MoM basis recorded by shares is to be expected, as Croatian pension funds hold a vast amount of shares in both domestic, but also to a lesser extent, foreign (Slovenian) companies. As January 2023 recorded some solid returns due to the improving macroeconomic situation (especially in terms of the warm winter & lower energy costs), positive sentiment was expected. The increase in bond holdings is also expected, as due to their nature the pension funds are risk averse, and bond holdings are some of the best assets in terms of mitigating risk. It will also be interesting to see how the first retail bonds issued by the Croatian government (more on which you can read here) will impact the asset holdings. However, this will only be evident from March 2023 onwards.
Coming back to the current asset structure of the pension funds, the largest share is still maintained by the bond holdings, which amounted to 62.5% of the total, a decrease of 0.93 p.p. MoM, but an increase of 0.45 p.p. YoY. Following them we have shares, which accounted for 21% of the total, representing an increase of 0.85 p.p. MoM, but a decline of 0.40 p.p. YoY, as well as investment funds, which accounted for 10.8% of the total, an increase of 0.22 p.p. MoM, but a decline of 0.27 p.p. YoY.
Current AUM of Croatian mandatory pension funds (January 2023, % of the total)
Source: HANFA, InterCapital Research
