At the end of April 2023, the NAV of the Croatian pension funds equaled EUR 18.4bn, an increase of 5.6% YoY, 4.8% YTD, and 0.9% MoM.
HANFA, the Croatian Financial Services Supervisory Agency has published the latest report on the changes and developments recorded by the Croatian financial markets, for the month of April 2023. According to the report, the NAV of Croatian pension funds amounted to EUR 18.4bn, representing an increase of 5.6% YoY (or EUR 967.6m), and 0.9% MoM (or EUR 164.4m). In terms of the net contributions to the pension funds, they amounted to EUR 98.6m in April 2023, and since the beginning of the year, they amounted to EUR 382.9m.
Croatian mandatory pension funds AUM structure change (January 2018 – April 2023, EURm)
Source: HANFA, InterCapital Research
In terms of the individual changes recorded by the asset holdings of the pension funds, on an MoM basis, the largest increase was recorded by deposits and cash holdings, which increased by EUR 296.4m, or 72.7%. Following them we have the money market holdings, which increased by EUR 60.3m, or 30.1%, and shares, which increased by EUR 16.6m, or 0.4%. On the other hand, bonds recorded by far the largest decrease, declining by EUR 229.2m, or 2%, while investment funds also recorded a notable decline, decreasing by EUR 54.4m, or 2.6%. Considering the fact that the pension funds have an increasing amount of money coming from the way that the pension system is set up, the decline in the value of these holdings can come from two sources: either the decline in the underlying assets or the decision of the fund managers to move the investments from one type of asset to another. Given that the deposits and cash, as well as money market holdings, are considered extremely low risk, and the high-interest rate environment that we currently have, it can be expected from the pension funds that they will increase their holdings of these assets, as they are by design risk averse. The decline in bond holdings can also be attributed to this, at least partially. Bonds are also extremely low-risk asset types, but in an environment where they yield similar returns to deposits and cash, which are both less risky and more liquid, this decline can be justified.
Moving on to the yearly basis, most of the asset classes recorded growth, with the largest absolute increase recorded by shares, which grew by EUR 341.2m, or 9.5%, followed by bonds, which increased by EUR 265.5m, or 2.4%, and the money market holdings, which increased by EUR 216.6m, or almost 5x YoY. Finally, deposits and cash also recorded a noteworthy increase, growing by EUR 116.9m, or 19.9%. On the flip side, other asset holdings declined by EUR 61.2m or 58.5%.
Finally, taking a look at the current asset structure of the pension funds, the largest holding is still in bonds, which account for 62.3% of the total, representing a decrease of 1.82 p.p. MoM, and 1.94 p.p. YoY. Next up we have shares, which account for 21.4% of the total, a decline of 0.1 p.p. MoM, but an increase of 0.77 p.p. YoY, as well as investment funds, which account for 11% of the total, a decrease of 0.4 p.p. MoM, and 0.69 p.p. YoY.
Current AUM of Croatian mandatory pension funds (April 2023, % of the total)
Source: HANFA, InterCapital Research
