UAIB Analytical Review of the Asset Management Market in Ukraine in Q2 2019. General Results
Ukrainian asset management industry highlights of Q2 2019:
continued, albeit decelerated, growth of total AuM, slowed outflow from open-ended funds
Ukrainian asset management companies (AMCs) had UAH 338.9 billion (EUR 11.4 bn) of total assets under management at the end of June 2019. This represents a 0.7% growth in UAH terms (and 3.6% in EUR terms) for the Q2 2019, down from 6.9% Q1. Year-to-date in June, the AuM have grown by 7.6%in UAH terms and annually, by17.1%(down from 21.5% in March).
Of the total AuM, 99.8% were the assets of the Collective Investment Institutions (CII), which consequently have shown the same pace of growth in Q2 2019, H1 2019 andannually as total AuM.
Total assets of ‘established’ CII (formed funds which have reached compliance with the minimal asset value requirement) amounted to UAH 329 billion (EUR 11.1 billion) at the end of June 2019, having grown by 3.7% in Q2 2019 in UAH terms (down from 7.0% in Q1) and by 17.3% since June last year (up from 15.7% in March).
New ‘venture’ CIIs remained key drivers of the expansion, in particular the corporate funds of this category; closed-end funds with public offering also demonstrated some further AuM growth in Q2 (+1.6%) but they NAV dynamics were almost flat in the quarter. ‘Venture’ funds’ NAV showed quarterly growth of 3.7%. The share of these CIIs in the total CII NAV kept growing since the beginning of 2019, from 93.7% in March to 94.1% in June (but still fell since June 2018, 96.2%).
Among the categories of publicly offered funds, open-ended and interval CIIs were still in the negative territory in Q2 2019 in terms of their total NAVs (the latter have again suffered the most in terms of net assets, losing further 4.1% in March through June). Publicly offered closed-end CIIs’ NAV edged up 0.2%,.
Number of AMCs in Ukraine declined by three in Q2 2019, to 295. Out of those, 280 AMCs had one to 36 CIIs under management as at end June, while 10 AMCs still had 17 acting open-ended funds.
Number of ‘established’ CIIsincreased for the 7th consecutive quarter, to1259 funds.
Number of investorsin all CIIs,has marginally declined in Q2 2019, mainly due to the dynamics in closed-end funds with public offering and also in open-ended funds while it grew in ‘venture’ funds.
There were 455foreign investors (mainly institutional/corporate non-residents) in all funds at end June 2019 (up from 450 in March). They still comprised around 0.2% of all of theCII investors and were holding 22.9% of their total NAV (up from 22.3% in March).
In open-ended CII:
Total NAV lost 1.5% in Q2 2019 and 1.6% YTD in June, but still rose by 2.5% annually (down from 5.3% in March), to stand at UAH 86 million. The sector’s quarterly decline was mainly due to capital outflow, but the prevailing negative market dynamics in Q2 also weigh down the funds’ portfolio valuations throughout the Q2, although its yearly trend as at end June 2019 was rather supportive.
Quarterlynegative net salescontracted in Q2 2019 (-UAH 1.5 million, after -UAH 2.1 million in Q1) and were the 4th consecutive outflow from the sector. This resulted in the bigger negativeannual net sales of UAH 5.5 million as at the end of June 2019 (down from -UAH1.2 millionin March).
The total number of investors in open-ended funds declined by 0.8% in Q2 2019 (after growing by 1.2% in Q1). Domestic retail investorsstillhad nearly 80% of the funds’ NAV in June and stillcomprised 98.6% of all of the investors in the sector.
Foreign investors in these funds comprised the same 0.3% of all their investors in June as in March 2019 while their share in total sector’s NAV has edged up within 10.7% in Q2 2019.
Non-state Pension Funds’ assetsunder management of AMCs (III-pillar NPFs,excluding the National Bank’s corporate pension fund) grew to UAH 1,505 million asat end June 2019, speeding up further to 5.6%in Q2 2019 (from 4.4% in Q1) and to 19% annually (from 17.1% in March), with open-type funds traditionally being the main driver (+6.6%).
There were 33 AMCs managing pension assets of 58 NPFsasat end June 2019 (down from 34 in March), out of which 45 were NPFs of open type, 7 of corporate and 6 of professional ones.
Insurance Companies’ assets under management of AMCs grew by 3.5% in Q2 2019 to UAH 93 million as at end June 2019 (after 12.0% in Q1) having contracted by 13.8% annually.
There were still two ICs whose assets were managed by one AMCs as at the end of June 2019.
1 Also see 2019 year-to-date dynamics of UAH among other local currencies vs USD: http://graphics.reuters.com/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html?fbclid=IwAR1Ud08T42-orkBLNzQoVEyAsIe2uxyIE4_OjFpEJ7FwXcpb50UIkGTV5bc.
2Venture CIIs are closed-end ‘non-diversified’ funds with private placement only, mainly investing in private equity and debt, with the lowest restrictions on their activity as compared to other fund categories.
3See fund classification at the UAIB website: http://www.uaib.com.ua/eng/abcpeople/cii_manual.html.
4The National Bank’s corporate NPF, which is managed by the NBU itself, had about 48% of the total NPFs’ AuM, based on the National Financial Services Commission and UAIB data.
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