UAIB: Performance of the Collective Investment Institutions in Q2 2016
After the turbulent first quarter of 2016, in April-May international stock markets kept mostly lateral trend, typical for summer. However, the 2nd quarter also did not pass without shocks, among which there was the key decision to withdraw Britain from the EU - Brexit. While it had mostly positive short-term impact on the stock indexes of this country, in Ukraine blue chips had their own reasons for rapid growth, including restoration after the failure in March and narrowing of the UX index basket and of listing of stock exchanges as a whole. Among Ukrainian CII the rise in the stock market affected mostly open-ended funds (by types of CII) and equity funds (by asset classes).
The key trends of Ukrainian industry of collective investments in the second quarter of 2016 were as follows:
Number of AMC, according to UAIB data, decreased in the 2nd quarter from 309 to 304, at the same time two new companies were created in Kyiv during the quarter.
Number of registered CII (total), as at 30.06.2016, was not changed (1572), and funds that have reached compliance with norms for the minimum amount of assets - dropped to 1135. This was again due mainly to the dynamics of venture UIF (-11), and also with open-ended (-3) and closed-end diversified UIF (by -3 in each sector).
Assets of CII that reached the standards accelerated quarterly growth in more than five times - up to +UAH 7,619 mln. (+3.2%) and as at 30.06.2016 amounted to UAH 245,206 mln., including venture funds – UAH 235,457 mln., where growth of assets again over compensated for the reduction in other sectors, in particular, in closed-end CII with private issue (except venture ones). However, in the 2nd quarter assets of open-ended (+1.3%) and closed-end funds with public issue (+1.4%) increased also.
NAV grew more slowly, but its increase was also several times higher than in the previous quarter – + UAH 6,984 mln. (+3.5%, after +1.4%). Net assets of all CII at the end of June amounted to UAH 209,702 mln., at that venture CII – UAH 200,475 mln., open-ended - UAH 54 mln.
Outflow of capital from open-ended CII still occurred each month during the 2nd quarter, but it decreased compared to the 1st quarter- to –UAH 0.78 mln. It also continued to decline year on year, and the annual one decreased to –UAH 3.26 mln.
Investors of CII continued shrinking (-112, -0.04%), although closed-end funds with public issue had positive trend on the part of investors-foreign citizens (+4 persons, +57.1%). Open-ended CII lost the most participants (-34 investors, -2.0%), as well as closed-end CII with private issue (other than venture funds) – by 2.6% (-8 investors). Totally, as at 30.06.2016, there were 261,705 investors in CII, more than 95% of which - in interval funds, 1.9% - in venture and the same in other private CII, including 1.8% - with public emission.
Ukrainian legal entities remained the largest investors of CII, though their share in NAV declined - to 72.4%. In open-ended funds the major contributors were still retail investors-citizens of Ukraine (72.4%). During the quarter domestic enterprises reduced their investments in CII by UAH 2,141 mln., whereas individuals - increased them by UAH 898 mln., and foreign investors – by UAH 3,435 mln.
The assetstructure of CII in the 2nd quarter of 2016 continued to change towards expanding the share of securities - in all sectors, at the same time only in open-ended and venture CII it was due to the increase of the aggregate value of financial instruments, while in other sectors it happened due to the relatively greater reduction in other classes of assets.
Trend of the last quarter lasted - an increase of equities’ total investments and share in venture funds (+UAH 2 559 mln., to more than 11.8% of their assets).
As at 30.06.2016, in the aggregate portfolio of CII’ assets financial instruments ranged from 21.4% in venture and 36.9% in other closed-end CII, to 71.3% - in open-ended and 74.9% - in interval funds.
CII rates of return generally increased for the quarter - this was contributed by the dynamics of the stock market in April-June. Open-ended funds (by types of CII), which showed +4.7%, were the most profitable among CII by an average indicator, and equity funds (+11.2%), where there were mainly open-ended CII, - among diversified CII with public issue by types of assets.
Leaders by increase of investments’ valuesince the beginning of 2016 were bond funds (+6.3%) and open-ended CII (+5.1%), and by the annual yield - bond funds (+17.1%) and closed-end CII with public issue (+13.1%).
For the full report, please see attachments below.