By the end of September 2022, the total assets under management (AUM) of Slovenian mutual funds amounted to EUR 3.86bn, which is a decrease of 10.9% YTD, 5.1% MoM, and 3.1% YoY.
The Slovenian Securities Market Agency (ATVP) has published its latest report on the changes recorded by the Slovenian mutual funds. At the end of September 2022, the mutual funds’ AUM decreased significantly, losing 5.1% of their value MoM, 3.1% YoY, and 10.9% YTD, which would mean that in total, it amounted to EUR 3.86bn. This continues the trend we witnessed last month when the AUM also decreased.
So, what happened exactly? First, the overall macroeconomic situation. Slovenian inflation is still at a high point (+10%) although its growth did start to decelerate (-1 p.p. MoM). Here we can see that despite the growing fears of a recession across the EU but especially in the Eurozone, the situation with inflation did somewhat stabilize for Slovenia, at least for now. However, what did not stabilize is the decline in the prices of Slovenian companies. The main index on the Ljubljana Stock Exchange, SBITOP, declined by almost 15% during September. Considering that shares make up 68.3% of the AUM of Slovenian mutual funds, the decline in their value is directly correlated to the decline in the mutual funds’ AUM. The situation isn’t expected to get better for equity anytime soon either, as the ECB is expected to raise interest rates several more times, which is having a strong impact on companies’ valuations, but also a strong impact on the financial sector, of which several Slovenian blue chip companies (NLB, Sava Re, Triglav) are a part of. Moreover, other companies like Petrol are affected by the current energy market situation, as well as the price caps imposed on them in Slovenia. Furthermore, Krka is also affected as they have 20% of sales in Russia, both directly due to the war but also indirectly as the rouble appreciated significantly during the year.
All of this would mean that the decline in equity was to be expected, and given just how much the mutual funds invest in Slovenian equity, they also lost value. However, it isn’t only that the Slovenian equity lost a lot of value this month, but so did the foreign companies. If we break down the equity holdings of Slovenian mutual funds into home issuers and foreign issuers, both of them lost value this month. The home issuers’ equity securities declined by 12.4% MoM, 22.9% YoY, and amounted to EUR 52.4m. Foreign issuers’ equity securities declined by 6.8% MoM, 5.3% YoY, and amounted to EUR 2.59bn.
Equity holdings of Slovenian UCITS funds (October 2007 – September 2022, EURm)
Despite this, however, if we look at the asset structure of the Slovenian mutual funds, shares still maintain the vast majority at 68.3%, however as mentioned, they did decline, by 1.3 p.p. MoM, and 1.9 p.p. YoY. This would mean that by the end of September, they amounted to EUR 2.64bn. Following them, we have bonds, which amount to 16% of the total AUM, and have gained 0.2 p.p. both on a monthly and yearly basis, amounting to EUR 617m at the end of September. Next up, we have the highest relative gainer, the money market, deposits & cash, which currently holds 9.2% of the total AUM, which is an increase of 1.9 p.p. MoM, and 3.5 p.p. YoY, meaning that they amounted to EUR 354m at the end of September. Finally, investment funds hold 6% of the AUM (or EUR 232m), which is a decrease of 1 p.p. MoM, and 1.7 p.p. YoY.
Total assets of Slovenian mutual funds (June 2007 – September 2022, EURm)
Despite these changes, the net contributions into the funds remained positive, at EUR 21.2m. However, if we look at the last twelve months, the net contributions totaled EUR 318.1m, which is a decrease of 16.1% compared to the same period last year. Meanwhile, the number of subscribers also continued to grow, amounting to 505.9k at the end of the month.
Net contributions into the Slovenian mutual funds (January 2016 – September 2022, EURm)
What can be taken from this data is that despite the severe decline experienced in the equity markets, especially in Slovenia, people are still willing to continue investing in mutual funds, which is after all good news. Also, even though crisis periods present a look of uncertainty and volatility in the markets, these are the periods where most gains can actually be made, and as such, continually investing despite the bad times, will in the long run always yield good returns.