By the end of May 2023, the NAV of the Croatian pension funds amounted to EUR 18.6bn, an increase of 6.8% YoY, and 1% MoM.

The Croatian Financial Services Supervisory Agency (HANFA) has recently released its latest report detailing the changes and developments observed in the Croatian financial markets during May 2023. According to the report, the NAV of Croatian pension funds reached EUR 18.6bn, reflecting a YoY increase of 6.8% (or EUR 1.2bn), as well as an MoM increase of 1% (or EUR 187m). Meanwhile, the net contributions into the pension funds amounted to EUR 109m in May 2023, while since the beginning of the year, it amounted to EUR 492m.

Croatian mandatory pension funds AUM structure change (January 2018 – May 2023, EURm)

Source: HANFA, InterCapital Research

Regarding the specific variations recorded in the asset holdings of the pension funds, the largest monthly increase was observed in bonds, with a rise of EUR 157m or 1.4%. Shares followed with an increase of EUR 49m or 1.2%, while investment funds experienced an increase of EUR 43m or 2.1%. On the contrary, deposits and cash exhibited the sole decrease, declining by EUR 110m or 15.5%. Given the prevailing high-interest-rate environment, a notable trend has been observed of funds shifting towards lower-risk assets, particularly bonds, especially when bond yields are at their highest in a decade.

Meanwhile, on an annual basis, most asset classes demonstrated growth. Bonds experienced the largest absolute increase, growing by EUR 515m or 4.6%, followed by shares with an increase of EUR 389m or 10.8%, and money market holdings with an increase of EUR 277m or more than six times YoY. Additionally, investment funds exhibited significant growth, increasing by  EUR 124m or 6.4%. Conversely, deposits and cash holdings declined by EUR 126m or 17.5%.

Examining the current asset structure of the pension funds, bonds remain the largest holding, constituting 62.5% of the total, representing an increase of 0.22 p.p. MoM but a decrease of 1.3 p.p. YoY. Following them we have shares, which constitute 21.5% of the total, remaining roughly unchanged MoM, but increasing by 0.78 p.p. YoY. The only other category with more than 10% of the total is the investment funds, which hold 11.1% of the total, an increase of 0.12 p.p. MoM, but remaining roughly unchanged YoY.

Current AUM of Croatian mandatory pension funds (May 2023, % of the total)

Source: HANFA, InterCapital Research