At the end of December 2023, the Slovenian mutual funds AUM recorded a 2.7% increase MoM, and a 21.7% increase YoY. However, it should be noted that net contributions contributed 8.6 p.p. to this growth. This would mean that the “real” asset growth amounted to 13.2%, and if we were to include the management fees as well, the return was closer to 15.7%.
According to the latest report on the developments recorded by the Slovenian mutual funds, released by the Slovenian Securities Market Agency (ATVP), the Slovenian mutual funds assets under management (AUM) recorded an increase of 2.7% (or EUR 125m) MoM, and an even more significant 21.7% (or EUR 858m) increase YoY. The last time that the Slovenian mutual funds recorded a large double-digit growth was in 2021, at the end of which the YoY growth amounted to 34%. Of course, back then, this happened for several reasons. Firstly, 2021 was in general a good year for equity and other investments. Secondly, quantitative easing was still in effect, while the interest rates were not elevated. Thirdly, inflation and geopolitical disruptions that we saw in the last couple of years have still not manifested to a significant extent. Lastly, the COVID-19 pandemic has mostly run out of steam by then, fuelling even more positive sentiment.
The last 2 years, on the other hand, have been anything but filled with positive sentiment. However, the last couple of months could be said to have seen some dashes of hope, such as the inflation cooling off, and subsequently, the ECB talking about interest rate cuts by the summer of 2024.
Returning to the mutual funds, in December 2023 and on an MoM basis, the largest absolute increase was recorded by shareholdings, which grew by EUR 120.8m, or 3.6%. Following them there are bonds at EUR 40.6m, or 5.5%, as well as the money market holdings at EUR 14.5m, or 12.4%. On the other hand, cash holdings decreased by EUR 38.6m, or 18.7%, while investment funds declined by EUR 11.8m, or 5%. Moving on to the YoY basis, during 2023, the largest increase was once again recorded by shares, which grew by EUR 709m, or 25.8%. Following them are bonds, at EUR 136m, or 21%, while the remaining categories remained roughly unchanged.
Total assets of Slovenian mutual funds (June 2007 – December 2023, EURm)
Source: ATVP, InterCapital Research
As such, the growth was primarily driven by the changes recorded in shareholdings and bonds to a lesser extent. Of course, the increase in these asset types can come from several directions, primarily the increase in the inherent value of the underlying assets, but also due to the net contributions into the funds. During 2023, the net contributions amounted to EUR 338m, growing by 62.6% YoY, but being app. 30% lower than the net contributions in 2021. As such, 39% of the increase in value of the Slovenian mutual funds came from net contributions, while the remainder came from higher value of assets. In other words, 8.6 p.p. of the YoY growth came from the net contributions, which would mean that the “real” asset value growth was closer to 13.2%. If we also add fund management fees, which we estimate at app. 2.5%, the return for the funds is closer to 15.7%. Meanwhile, the number of subscribers amounted to 520.5k, decreasing by 1.6% MoM, but growing by 2.2% YoY. Compared to 2021, this represents a growth of 5.3%.
Net contributions into the Slovenian mutual funds (January 2016 – December 2023, EURm)
Source: ATVP, InterCapital Research
As equity holdings constituent both the majority of assets held in the funds (71.9%) and were also the main drivers of the growth recorded by the funds, it is also prudent to take a closer look at what drove that performance. At the end of 2023, home issuers’ equity securities amounted to EUR 56.4m, growing by 2.1% MoM, and 0.8% YoY. On the other hand, the much larger foreign issuers’ equity holdings (representing 98.4% of all equity holdings) amounted to EUR 3.4bn, growing by 3.6% MoM, and 26.3% YoY. As such, the main drivers of growth in the Slovenian mutual funds were the foreign equity holdings, which also recorded a solid year in 2023.
Equity holdings of Slovenian UCITS funds (October 2007 – December 2023, EURm)
Source: ATVP, InterCapital Research
Lastly, taking a look at the current asset structure of the Slovenian mutual funds, shares make up 71.9% of all holdings, growing by 0.66 p.p. MoM, and 2.32 p.p. YoY. The 2nd largest share is held by bonds at 16.3%, which also grew by 0.43 p.p. MoM, but declined by 0.10 p.p. YoY. On the flip side, the money market, deposits & cash held 6.5% of the total, declining by 0.65 p.p. MoM, and 1.05 p.p. YoY. A similar story is present with investment funds, which held 4.7% of the total, and declined by 0.38 p.p. MoM, and 1.12 p.p. YoY.
