At the end of April 2024, the Croatian mutual funds NAV increased by 1.8% MoM, and 32% YoY, amounting to EUR 2.61bn. This marks the largest YoY growth since the beginning of 2017, marking a solid acceleration in their development. Furthermore, due to this growth, the NAV of the mutual funds stands at “only” 15.7% lower than its pre-COVID-19 maximum.

According to the latest report on the Croatian mutual funds released by the Croatian Financial Services Supervisory Agency, i.e. HANFA, the Croatian mutual funds NAV have recorded significant growth in April 2024, by 1.8% MoM, and 32% YoY. This would mean that the NAV amounted to EUR 2.61bn, coming closer to the pre-pandemic maximum, being only 15.7% lower than it. Furthermore, the NAV’s growth rate on an annual basis was the largest ever since the beginning of 2017.

To understand how this development happened, we should take a look at the main drivers, i.e. the change in the underlying value of the assets, as well as the net contributions into the funds. Starting off with the latter, the net contributions in April amounted to EUR 60.8m, being primarily driven by investments into cash funds, which on a net basis amounted to EUR 66.6m. The majority of other fund types didn’t record a significant change, except bond funds, which recorded net redemptions of EUR 8.4m during the month. Meanwhile, in the last twelve months ending in April, the net contributions amounted to EUR 558.6m, while during the same month last year (also on a TTM basis), they amounted to EUR -221m. As such, it could be said that retail sentiment and confidence have contributed significantly to the development of the fund’s NAV.

Net contributions to the Croatian mutual funds (January 2021 – April 2024, EURm)

Source: HANFA, InterCapital Research

In fact, if we look at the absolute changes, the NAV change on the annual and monthly basis amounted to EUR 632.6m, and EUR 45.5m, respectively. As such, 88% of the annual growth came from the net contributions, while the change in the value of the assets of these funds was actually negative on a monthly basis, as the net contributions were higher than the MoM change (EUR 60.8m vs. EUR 45.5m). As the asset structure of the funds is a “balance sheet” showing the value at a certain date, the net contributions still increase, leading to a positive monthly change.

Moving on to the change in the value of the assets of the funds, on a monthly basis, the largest change was recorded by the money market holdings, which grew by 36%, or EUR 37.7m, followed by deposits and cash, which increased by 8.7%, or EUR 31.9m. On the other hand, bonds decreased by 1.4%, or EUR 20.8m, investment funds decreased by 5%, or EUR 10.4m, while the other assets category decreased by 95%, or EUR 14m. Meanwhile, on an annual basis, bonds recorded the largest increase, growing by 21.5%, or EUR 255m, followed by deposits and cash at 59%, or EUR 147.7m, shares at 40.4%, or EUR 124m, as well as the money market holdings, at 59%, or EUR 147.7m. The only category to record a decrease was the investment funds, which declined by 5.1%, or EUR 10.5m.

Total assets of the Croatian mutual funds (January 2015 – April 2024, EURm)

Source: HANFA, InterCapital Research

In terms of the securities and deposits, in total they amounted to EUR 2.56bn, growing by 1.4% MoM, and 35.7% YoY. Of this, domestic securities and deposits amounted to EUR 906.7m, growing by 3.5% MoM, and 11.7% YoY, while foreign securities and deposits amounted to EUR 1.65bn, growing by 0.3% MoM, and 53.8% YoY.

Lastly, looking at the current asset structure of the funds, bonds still hold the majority at 54.7%, declining by 1.49 p.p. MoM and 4.62 p.p. YoY. Following them there are shares at 16.4%, declining by 0.19 p.p. MoM, but increasing by 1.01 p.p. YoY, as well as deposits and cash at 15.1%, with growth of 1.04 p.p. MoM, and 2.59 p.p. YoY.

Current AUM of Croatian mutual funds (% of the total, April 2024)

Source: HANFA, InterCapital Research

According to the latest report on the movements of the Slovenian CPI, it grew by 0.5% MoM, and 2.5% YoY in May 2024.

The Slovenian CPI continues to slow down in May 2024, both on a monthly and yearly basis. In the latest report released by the Slovenian Statistical Office, the Slovenian CPI grew by 0.5% MoM, and 2.5% YoY by the end of May 2024. Compared to the previous month and the same month last year, during which the YoY CPI growth amounted to 3% and 8.4%, respectively, we can see clear signs that inflation is cooling off in the country. This is in line with the ECB’s set target of 2% YoY inflation, which could be hit in the next couple of months if the current trend continues.

Slovenian CPI change (January 2011 – May 2024, %)

Source: Slovenian Statistical Office, InterCapital Research

Breaking the CPI change down by components, on an annual basis, service prices on average increased by 4.3%, while goods prices grew by 1.6%. Inside the goods category, non-durable and semi-durable goods prices increased by 2.3% and 1.7%, respectively, while durable goods prices declined by 0.9%. Furthermore, the annual growth rate was most affected by 6.8% higher prices in restaurants and hotels, contributing 0.5 p.p. to the 2.5% YoY increase. Following them, the higher prices in the group housing, water, electricity, gas and other fuels, at 3.1%, contributed 0.4 p.p. to the YoY inflation rate.

Moving on to the monthly change, the largest contribution to the monthly inflation came from 4% higher prices of package holidays, contributing 0.2 p.p. to the monthly inflation rate. At the same time, higher prices of fruit (+7.2%) as well as women’s garments (+2.9%) contributed 0.1 p.p. each to the monthly inflation, respectively. All other price increases in May contributed another 0.2 p.p. to the monthly inflation rate. On the other hand, 2.1% cheaper diesel prices contributed negative 0.1 p.p. to the MoM inflation rate.

Lastly, looking at the harmonized index of consumer prices (HICP), the annual growth rate amounted to 2.5%, while the monthly increase amounted to 0.4%. In terms of categories, service prices grew by 4.8%, while goods increased by 1.3%. Inside the goods category, non-durable goods increased by 2.2%, semi-durable goods by 0.8%, while durable goods prices declined by 1.9%.