UAIB: Performance of the Collective Investment Institutions in Q2 2013

03 September 2013

The industry of collective investment institutions in Q2 2013 demonstrated further growth in the sector of venture funds, as well as preserved downtrends in the sector of public, in particular, open-ended CII.

The key trends of the Ukrainian CII market in Q2 2013 in many aspects deepened the changes had registered during three preceding months, although in April – June new trends were observed, namely: the venture sector resumed asset growth, which happened owing to an increase in the number of funds belonging to this category; capital outflow from open-ended CII intensified both due to national and foreign investors; and CII rates of return declined virtually by all types and classes of funds.

In the meanwhile, such trends as decrease in the number of market participants – AMC and funds that reached compliance with the standards, as well as a further growth of registered CII number, continued.

The number of AMC in Q2 decreased by 3 companies, as 4 AMC from Kyiv and region left the market. As of 30.06.2013, as per UAIB data, there were 345 asset management companies in operation.

The quantity of registered CII once again increased (1580), and the quantity of CII that reached compliance with the minimal asset volume standard, just as in the preceding quarter, dropped by 9 – up to 1204, which to a great extent was due to liquidation of closed-end non-diversified CIF. 12 venture CII entered the market, including one corporate CII.

The assets of CII went on growing solely owing to venture funds: the aggregate ones – by UAH 5 725 mln. (+3.62%) to UAH 164 052 mln., and those of venture CII – by UAH 6 414.03 mln. (+4.33%) up to UAH 154 543 mln. Finally, the venture sector broadened its market share within total assets up to 94.2%.

The NAV of funds resumed its traditional upward dynamics supported by venture funds, though a certain growth by this indicator was observed in the interval sector as well. CII aggregate net assets added UAH 7 652.94 mln. (+5.55%), having grown to UAH 145 588 mln., and those of venture CII – UAH 8.322.40 mln. (+6.46%), up to UAH 137 156 mln.

Capital outflow from open-ended CII in Q2 turned out to be the greatest one after Q1 2012, having reached UAH 12.41 mln., with the last month of the quarter facing a major withdrawal of moneys – UAH 8.47 mln. – making it the last fifteen months’ maximum. Once again, the key role here was played by one fund. As a counter to that, the quantity of open-ended CII with net inflow increased and reached between 4 and 9 funds, depending on the month, which during the quarter attracted UAH 1.26 mln. worth of additional capital (down from UAH 7.42 mln. in Q1 2013).

The investors of CII in April – June were investing mainly into venture CII, where the main share was held by legal entities – residents, just as previously (increase from 77.5% to 79.5%). They also remained the greatest investors in the market on the whole (78.5%). Companies – non-residents and citizens of Ukraine also increased their investments into the venture sector, though the respective share of the former in the net assets of these CII narrowed from  19.0% to 17.9%, and of the latter – grew nominally (within 2.6%). In open-ended funds natural persons – residents broadened their share due to their passive behavior under conditions of institutional investors’ exit (from 48.2% to 51.2%).

The asset structure in Q2 2013 demonstrated narrowing of the share of securities in all CII sectors, with exception of interval ones (to 52.0% in open-ended, 54.6% in closed-end, and 29.9% in venture ones). There it grew up to 75.4%.

Particularly notable were: a withdrawal of a substantial portion of equities from open-ended CII assets, a decrease of the aggregate moneys of these funds held in banks, as well an increase in the investments into OVDP. The share of bonds within the assets of closed-end – both venture and the rest of CII of this type - narrowed, and in the aggregate portfolios of open-ended and interval funds’ sectors the investments into corporate bonds and their respective share decreased.

The most liquid part of open-ended and closed-end venture CII portfolios demonstrated a relative growth.

Venture CII held most of “other assets”, the share of which grew from 63.2% to 65.5%.

The rates of return of CII in April – June went down together with the stock market indexes. Fewer CII demonstrated securities’ value increase, in particular, among open-ended funds their number dropped to 15 out of 40. An average sector rate of return went down to -1.8%, whilst individual CII results varied (from -36% to +15%).

Interval funds earned between -21% and +12%, with an average return of -1.3%, closed-end ones – between -76% and +26%, with an average return of -3.2% (not taking into account funds that lost more than a half of their securities’ value and significantly lagged behind the rest of closed-end CII by rates of return generated, with an average sector indicator reaching -1.7%).

Among diversified publicly placed CII in Q2 most successful were: a monetary market fund (+3.9%), hybrid funds ( -1.0% on average, and +3.3% - the leader’s result) and some “other” funds (with conservative strategies –+3.7% on average). In the meantime, equity funds demonstrated a decline in the rates of return up to -1.2% from +1.7% in Q1.

Assets Under Management

Open-ended funds' NAV Dynamics

NAV of CII (excluding venture)

NAV of Venture CII