UAIB: Performance of the Collective Investment Institutions in Q3 2015
In July-September 2015, the Ukrainian collective investment institutions industry continued to grow as a whole, at that at double accelerated pace as compared with the previous three months.
Complicated market conditions, in particular, falling of stock indices during this period, and also lack of preconditions and incentives for both quantitative growth, as well as qualitative development of the industry, against the backdrop of a wave of legislative and regulatory innovations and initiatives were those factors which kept the downward trend of majority sectors of CII and inhibited their growth.
The main trends in the Ukrainian industry of collective investments in Q3 2015 were as follows:
the same as in the previous quarter – further reduction of the number of AMC and funds under management and reduction of the number of investors in the market - together with their increase in venture CII and more active upbuilding of volumes of investments in these funds by different categories of investors;
growth of assets and NAV exclusively due to venture CII;
reducing of volume and share of assets in securities (in particular, in equities) in all sectors of CII;
slight increasing of capital’s outflow from open-ended CII and sharp weakening of its role in the dynamics of the sector’s net assets;
compared to equity indices’ drop - a slight decrease of profitability in all sectors of CII by types and classes of assets, except bond ones and "other" funds (diversified, with public issue);
continued presence of funds, which ensured investment gains for their members for the quarter, in all sectors of CII.
The number of AMC, as per UAIB data, decreased from 326 to 320 companies, simultaneously two new AMC were created during the quarter.
The number of registered CII (total, as of 30.09.2015) was not changed – 1556, and the number of funds, which reached complience with the standard to minimal asset volume - declined from 1171 to 1151. This was again related mainly to the dynamics of venture UIF (-14) and closed-end non-diversified UIF (-6), while the sector of venture CIF expanded (+5).
Assets of CII in Q3 2015 increased by UAH 7,969 mln. (+3.7%) and, as of 30.09.2015, amounted to UAH 225,041mln., including venture CII - UAH 214,703 mln. This increase was provided exclusiely by venture funds, while the rest sectors of CII showed a decrease of assets, in particular, due to reducing the number of (closed-end) funds.
NAV also accelerated its growth twice - the total net assets of all funds increased by UAH 7,286 mln. (+3.9%) to UAH 196,051 mln., at that of venture CII – by UAH 8,960 mln. (+5.0%) to UAH 186,562 mln.
The capital outflow from open-ended CII, which wasobserved each month during the 3rd quarter, in general accelerated slightly - to –UAH 1.46 mln. Meanwhile, it continued to fall actively during the annual period (-84% than a year ago). The number of funds with a net inflow of capital declined, as well as their cumulative amount of additional attractions.
Investors of CII, the same as in the 2nd quarter, became less in all sectors of CII, except the venture one. Amount of funds, which belonged to the largest investors of CII - Ukrainian institutional investors, changed similarly to it: it increased significantly in the sector of venture funds and declined in all others. Besides that, inflow of capital from foreign investors continued the 4th consecutive quarter. Total investments in venture CII continued to grow from all categories of investors, except foreign citizens.
In general, as of 30.09.2015, domestic corporate investors had the greatest weight in CII by value of assets. Their share increased for the quarter from 75.6% to 75.9%. The share of local retail investors, despite the increase of the amount of their total investments, decreased slightly within 6.3%.
The structure of assets in Q3 2015 continued to experience a further reduction of the amount and proportion of securities - in all sectors by the type of funds. Financial instruments narrowed to 22.5% in the consolidated portfolio of assets of venture funds and 27.3% - of closed-end ones to 63.2% and 73.8% - of open-ended and interval funds, respectively. The share of "other" assets in venture CII increased to 73.5%, in other closed-end CII - to 59.4%.
CII rates of return for the quarter as a whole decreased in all sectors of CII by types and classes of assets, except bond funds. Closed-end (non-venture) CII with private issue were leading again among sectors by the types of funds, although their average rate of return was negative (-1%). Interval CII had the lowest average rate for the quarter (-3.4%) - almost the same as in Q2 2015. Closed-end (non-venture) CII with public issue brought the similar result.
The number of funds among interval, open-ended and closed-end (non-venture) CII with public offering that provided gains of investments for the quarter, decreased again - to 4 out of 21, 9 out of 24 and 14 out of 44, respectively. Instead it increased among closed-end (non-venture) CII with private offering – to 12 out of 41 funds.
Among diversified CII with public offering by classes of funds leadership passed to the single bond fund in this class (+3.7%). Equity funds transformed from the leader to the outsider (-6.0%), although they tempered the impact of stock indices’ falling, which was more than twice as large. The remaining classes of assets also showed an average negative result in the third quarter, while among mixed funds as well as "other" diversified publicly offered funds there were such ones that raised the value of their investors’ holdings.
Based on the results since the beginning of 2015 bond funds also led among CII (+18.0%). Among sectors by the types of funds, open-ended CII also provided growth in the value of investments during this period (+3.7%), as well as closed-end CII with public (+1.9%) and private (+2.8%) offering.
For the full report, please see attachments below.