As of end January 2021, NAV of Croatian Mandatory Pension funds amounted to HRK 120.24bn.

Pension funds could be seen as the key player on the Croatian capital market, as their current domestic equity holdings account for more than 40% of the free float market cap of ZSE. NAV of pension funds has witnessed a steady increase for each consecutive month since April, and as of end Jan stood at HRK 120.2bn (+5.9% YoY or HRK 6.66bn). To put things into a perspective, such NAV is converging very closely to the entire equity market cap of the Zagreb Stock Exchange (excluding PBZ – to be delisted).

Looking at the MoM performance, NAV of Mandatory Pension funds is up by 1%, showing an increase for the 10^th consecutive month. It is also worth adding that in January net contribution payments amounted to HRK 555.99m (+10% MoM).

Asset Structure of Croatian Mandatory Pension Funds (January 2021)

Source: Croatian Financial Services Supervisory Agency, InterCapital Research

Looking at the asset composition of pension funds, asset managers have not changed significantly their composition in 2020, which can be seen in the graph above. Bonds account for the vast majority of total assets (66.9%) which as of end 2020 amounted to HRK 80.82bn (increase of HRK 1.52bn YoY or 1.9%). Shares come next, with 18.5% or HRK 22.4bn, representing an increase of 1.7% MoM (or HRK 375.9m).

Total Assets of Croatian Mandatory Pension Funds (2018 – Jan 2021) (HRK bn)

Source: Croatian Financial Services Supervisory Agency, InterCapital Research

For today, we decided to present you with an updated asset structure analysis of Croatian UCITS funds.

Since asset managers play a significant role in the Croatian capital market, it is particularly interesting to see how they have been performing since the outbreak of the pandemic. As visible from the graph below, NAV of all funds has witnessed a steady increase for each consecutive month since April, and as of end January stood at HRK 18.54bn (+1.8% MoM). This still represents a decrease of 19.6% YoY (or HRK 4.52bn).

As a reminder, in March, UCITS funds observed a sharp decrease in their NAV of 32.2% or HRK 7.42bn. We note that most of the mentioned decrease could be attributed to the withdrawals from the funds, while a smaller portion reflects the change in value of assets in which the funds invest in. As turmoil on financial market subsided withdrawals from funds were halted.

The biggest decrease of a YoY basis was observed in bond holdings, which decreased by 23% or HRK 3.49bn. Meanwhile shares observed a decrease of 7% or HRK 131.44m.

On a MoM basis, bonds have observed the solid increase in nominal terms of HRK 264m or 2.2%. Looking at domestic equity holdings, they are up by 4.1%, while CROBEX was up by 2.7% in January.

Asset Structure of UCITS funds (January 2021)

Looking at the asset composition of Croatian UCITS funds, it seems that asset managers have not significantly changed their composition, which can be seen in the graph above. Since the beginning of 2020, we witnessed a considerable decrease of bonds in the assets structure which went from 65% in January 2020 to as low as 59% (April), while as of January 2021 bonds take up for 62.5% of the total assets. Such a decrease could mainly be attributed to the above-mentioned withdrawals from funds which (predominantly) invest in the mentioned asset class.

Shares have observed a gradual increase in total assets since February, and currently account for 9.3% of the total assets (or HRK 1.78bn). Note that domestic shares account for 30% (or HRK 527.5m) of the total equity held by Croatian UCITS funds. Domestic equity holdings are down by 14.8% YTD, representing a decrease of HRK 91.6m.

Total Assets of All Croatian UCITS Funds (2015 – January 2021) (HRK bn)

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