On a YTD basis, Končar & HPB were the only companies to outperform the CROBEX10 index significantly, while a good few number of constituents outperformed the index in terms of the number of trading days (%) YTD. In this quick overview, we bring you the details of why this happened.

On a YTD basis, CROBEX10 managed to return a solid 8.5%, based on the strong performance of many of its constituents. The stars of the show, however, are Končar and HPB. These companies managed returns of 38%, and 24.1%, respectively, YTD. During Q1, the only quarter to have been published yet this year, top-line growth was recorded by almost all the companies, due to an increase in prices supported by sufficient demand and volume growth, but with mixed development regarding profitability. Food companies saw improvements in profitability on the back of higher prices coupled with volume growth. Tourism companies saw improvements on the top line on the back of higher prices, while profitability was under threat due to higher costs. Industrials were the category that recorded significant improvement in the few previous quarters, including this one, as demand for products remains high, while major expense categories’ growth was controlled. Telecoms recorded better revenue & profitability, helped by price indexation.

Price performance of CROBEX10, CROBEX10 constituents in 2024 YTD (%)

Source: ZSE, InterCapital Research

As we can see, other companies did not slack off, however, with HT, Valamar Riviera and Adris (pref.) returning 9.2%, 7.6% and 6% YTD, respectively. On the other spectrum, Span recorded the biggest YTD loss, the only company to note a double-digit YTD loss, of 10.6%. Further, Atlantic Grupa and Podravka recorded a slightly decline of 4.4%, 3.4% since the end of 2023, respectively.

How much did individual constituents outperform/underperform compared to the index (2024, p.p.)

Source: ZSE, InterCapital Research

Given the strong returns, Končar outperformed the index by more than 29 p.p., while HPB outperformed the index by more than 15 p.p. HT yielded slightly more than the index itself (+0.6 p.p.). The other companies underperformed the index. Out of the remaining companies, half of the constituents underperformed CROBEX 10 by double-digit returns, due to more or less flat movement on the market, vs. CROBEX 10’s aforementioned high single-digit return. For example, Atlantska Plovidba underperformed the index by more than 8 p.p. on the back of flat share price development, while Podravka and Span underperformed CROBEX 10 by 19.1 p.p. and 12.9 p.p., respectively.

How often did CROBEX10 constituents outperform the index in 2024 (% of working days)

Source: ZSE, InterCapital Research

This brings us to an interesting conclusion and one that might not seem that obvious from the start. So far, 2024 is a good year for CROBEX10 and its constituents. As such, the high return recorded by the index was the weighted sum of the performance of the individual companies. In other words, if these companies gave returns on certain days, which by themselves might not seem much (especially when they’re weighted in the index), the overall index return was still high, since it takes into account all of their performances. When companies perform as well as most of these companies did then, they can significantly boost the index performance, leading to it “outperforming” them on those days.

As such, looking at this data by itself can be misleading. It should be taken with other indicators, such as the price performance, or any other metric that one investor might be interested in. Still, 10 companies in an index do make things relatively simple. Imagine looking at an index such as the S&P 500, in which most of the companies have such low weights, that even if they gave a 100% return, a tiny increase in the index due to other companies’ performance (usually the largest ones) would still mean that the index would outperform that individual stock.

According to the latest report by the Slovenian Securities Market Agency, the NAV of the Slovenian mutual funds amounted to EUR 5.45bn in May, recording an increase of 3.3% MoM, but an increase of 26.6% YoY.

At the end of May 2024, the Slovenian mutual funds recorded an NAV of EUR 5.45bn, growing by 3.3% MoM, and 26.6% YoY. To understand the drivers behind these changes, a closer look at net contributions and the underlying asset values is required. Starting with net contributions, in May, they amounted to EUR 26.9 million, marking a significant decrease of 39% MoM but an increase of 18% YoY. The overall MoM increase in assets was EUR 172.4 million, indicating that without net contributions, the “real” increase would be approximately EUR 154 million. This suggests that the primary driver of the increase was the change in asset values, as detailed below.

Net contributions into the Slovenian mutual funds (January 2016 – May 2024, EURm)

Source: ATVP, InterCapital Research

On a trailing twelve-month basis ending in May, net contribution amounted to EUR 446m, accounting for 39% of the total YoY increase in the mutual funds’ NAV. This would mean that 61% or EUR 701m of growth came from the increase in the value of assets. Moving on, the number of subscribers continued to grow in May, reaching 543.6k, a rise of 0.4% MoM and 4.9% YoY. This growth indicates that contributions came from both existing and new subscribers.

Regarding the asset performance, in April, the “other assets” category saw the largest absolute MoM decrease, but in May, this category experienced the largest absolute increase, at EUR 4.3m, or 40.5%. Significant increases were also recorded in the shares and investment funds categories, both growing by 4% MoM. Given that shares comprise the largest portion of the total assets, their absolute increase of EUR 162.4m was more impactful compared to the EUR 8m increase in investment funds. On the other hand, the only notable decrease in MoM was in the deposits and loans category, which decreased by EUR 1.5m, or 15.5%.

Meanwhile, on a YoY basis, the growth has been more substantial. The most significant increase came from shares, which grew by EUR 1.14bn, or 37.6% YoY. This was followed by money market holdings, which rose by EUR 76m, or 103%, and bond holdings, which increased by EUR 66m, or 9%. Conversely, investment funds and cash holdings saw the largest declines, decreasing by EUR 72m, or 25%, and EUR 55m, or 31%, respectively.

Total assets of Slovenian mutual funds (June 2007 – May 2024, EURm)

Source: ATVP, InterCapital Research

In the current asset structure of the funds, shares constitute the majority at 76.6%, showing an increase of 0.57 p.p. MoM and 6.11 p.p. YoY. Bonds follow, making up 14% of the total, which reflects a decrease of 0.44 p.p. MoM and 2.21 p.p. YoY. Money market instruments, deposits, and cash holdings account for 5.1%, down by 0.23 p.p. MoM and 0.93 p.p. YoY. Lastly, investment funds comprise 4% of the total, with a slight growth of 0.02 p.p. MoM but a decrease of 2.74 p.p. YoY.

Given their significant stake in the total assets, it is prudent to examine the shares more closely. The majority of the shareholdings in Slovenian mutual funds consist of foreign issuers’ shares, accounting for 98.44% of the total, or EUR 4.11 billion. These shares have increased by 4.1% MoM and 38% YoY. In contrast, domestic issuers’ shareholdings amount to EUR 65.2 million, marking an increase of 0.9% MoM and 11.2% YoY. This indicates that most of the subscriber inflows have been directed towards foreign equity funds.

Equity holdings of Slovenian UCITS funds (October 2007 – May 2024, EURm)

Source: ATVP, InterCapital Research

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