UAIB: Performance of the Collective Investment Institutions in Q3 2014
In Q3 2014 collective investment industry demonstrated hybrid results: traditionally some indicators grew, and at the same time the others went down along with the stock market.
The main trends of the Ukrainian CII market in July-September 2014 were as follows: further reduction in the number of AMC and CII - both registered and those that reached compliance with the minimal asset volume standard; growth of assets under management due to venture and other closed-end CII; slowdown of net capital’s outflows from open – ended CII while reducing the number of operating funds and progressive growth of inflows to some of them; increase in the proportion of securities in the portfolios of non-venture CII - mainly due to obtaining of governmental and corporate bonds, and also because of decrease in moneys and deposits; reduce of assets in securities and growth of volume of direct investments and loans (“other” assets) in venture funds; decrease of rates of return in all sectors of CII by types and classes of funds, except the bond ones.
Number of the AMC in Q3 2014, according to the UAIB data, decreased to 337 companies, despite increase in the number of new market’s participants to 8 for the quarter.
Number of the registered CII at the end of September became less – by 5 – to 1586 funds, and the number of CII, that reached compliance with the minimal asset volume standard decreased by 26 funds, to 1207. Sectors of venture and other closed-end UAF narrowed the most
Assets of the CII in Q3 2014, however, grew especially due to the sector of closed-end funds and, as of 30.09.2014, amounted to UAH 205 359 mln., including venture funds – UAH 194 556 mln. The growth of total assets of all CII decreased per quarter more than twice - to UAH +5 440 mln. (+2.7%), including in venture funds – to + UAH 4 622 mln. (+2.4%).
NAV of open-ended CII decreased by 16.3%, interval ones – by 5.4%, at the same time the total net assets of the industry increased by 2.7% (+UAH 4 780 mln.), to UAH 180 423 mln., and of venture funds – by +2.5% (+ UAH 4 187 mln.), to UAH 170 797 mln.
Capital outflow from the open-ended CII in July – September 2014 slowed down by quarter - to UAH 9 mln., and in annual terms – decreased to UAH 47.5 mln. The proportion of net outflow in NAV dynamics of the sector, accordingly, also fell sharply, and that took place against the losses caused by reduction of the value of financial instruments’ portfolio in assets. The role of individual funds in creating the aggregate outflow weakened greatly, and of those, that were more successful in attracting the additional funds – grew – all together they received more than UAH 1.8 mln. during the quarter.
Investors of the CII in Q3 2014, in general, increased their investments in CII – mostly in venture funds, where natural persons-residents increased their presence even more, than legal entities did. The share of assets, which belong to Ukrainian citizens, grew in NAV of all CII in Q3 from 5.6% to 5.7%. However, domestic investors decreased their investments in open-ended and interval CII. Foreign investors, namely – corporate ones, became fewer in venture CII, and their total investments here decreased.
Totally, in the whole industry of CII, as of 30.09.2014, domestic enterprises had the main share in terms of volumes of investments (more than 79%), and citizens of Ukraine had it in open-ended funds (66%). The largest categories of investors by the number in open-ended, interval and closed-end non-venture CII were retail investors-residents (from 89% to 99%), in venture CII - the corporate ones (98%).
Asset structure of the CII in Q3 2014 changed being influenced by stock market’s decrease, capital outflow from the open-ended CII, raising attractiveness of governmental debt securities and growing of “other” assets ( corporate rights and loans) in venture funds.
Along with decreasing of the volume of assets in securities in cumulative CII’ portfolios, their share in all sectors of CII, except venture ones, grew. It was the largest in interval funds - 77% (including equities – 69%), in open-ended funds -53% (equities – 34%), in closed-end and venture ones - 43% and 25% (equities – 34% та 12% respectively).
In venture CII the share of securities decreased, and additional direct investments and loans strengthened the growth of their weight (from 68% to71%).
Rates of return of the CII for the quarter decreased in general, and most of funds in each sector, except the bond one, experienced losses. 10 open-ended, 7 interval and 33 closed-end non-venture CII succeeded to multiply the investors’ funds. An average losses of open-ended CII constituted -1.5% with the range of results of individual funds from -14.4% to +10.0%; interval funds demonstrated an average of -2.5% (all indicators within -19.5% to +7.3%). Closed-end CII, that had the wide range of results (from -43.2% to 145.9%), ensured an average rates of return as of +0.8%.
Among the classes of diversified CII with public issue, the same as among all CII, the leaders were bond funds (+4.6%), which contained 4 open-ended CII in Q3. Equity funds were the outsiders (-6.8%), although they exceeded greatly the UX index. Mixed funds showed -2.2% per quarter, “other” funds - -2.3%.
An average rate of return for the nine months of 2014 was positive in all sectors of CII. Open-ended and closed-end funds brought rather high +11.4% and +14.2% respectively, while equity funds demonstrated +9.6%, mixed funds - +5.6%, and some of bond funds - up to 44.2%.