UAIB: Analytical Review of the Asset Management Market in Ukraine in Q2 2018. General Results
In April-June of 2018, the world's leading stock markets predominantly grew, despite turbulence in global trade. Ukrainian blue chips at this time demonstrated a multi-directional dynamics, the key indicator of the stock market fell due to some internal causes, but correlated with the downward movement of emerging markets during this period, after the rapid growth in the previous quarter. Rate of return of collective investment institutions which invest in securities, respectively, declined. Nevertheless, it was positive for many CII during this period. Almost all equity funds with a public issue showed results higher than the key equity index, and the influx into investment funds, in particular into open-ended ones, continued. By the results of the quarter, the assets of all CII under management, as well as assets and NAVs of the formed funds, returned to growth.
The key trends of the asset management industry in Ukraine in Q2 2018 were as follows:
The number of AMC, according to the UAIB, decreased to 291 - during the quarter 5 AMCs were closed, and new ones were not created. The number of operating funds that have reached the minimum volume of assets ("recognized" CII), as at June 30, 2018, increased to 1,203, mainly due to venture CIF.
The assets of the CII that have reached the standards grew by 1.9% in the second quarter of 2018, and the assets of all CII under management, including those that have not yet reached the standards, rose by 4.5%. As at the end of June 2018, the assets of "recognized" CII amounted to UAH 266,234 M, including venture funds - UAH 257,882 M. NAV of all CII as a whole also grew - by 1.5%, to UAH 212,286 M, including of venture CII - up to UAH 204,185 M (+1.6%), of open-ended ones - up to UAH 84 M (+1.2%), of interval CII - decreased to UAH 80 M (-0.4%), of closed-end CII with public issue – to UAH 2,765 M (-8.7%).
The net inflow of capital into open-endedCII in the 2nd quarter of 2018 moderately increased and amounted to +UAH 2.8 M, while the annual growth continued to grow rapidly (to +UAH 7.6M).
The number of CII investors increased by the quarter (+0.1%), mainly due to venture CII, as well as to closed-end CII with a public issue, up to 261,448 investors. In open-ended funds, however, the number of participants decreased by 33 (-1.9%), including 31 retail resident-depositors, to 1,702 investors altogether. In total 98.5% of them were natural persons - residents of Ukraine, 96.1% - participants of interval funds, 0.7% - of open-ended ones, 1.5% - of venture CII.
The largest investors of CII (by share of NAV) as a whole remained Ukrainian legal entities, which in the 2nd quarter of 2018 increased their funds in CII, but insignificantly lost weight in comparison with other categories of funds’ participants (to 63.3% in all funds and to 64.5% - in venture ones). In open-ended CII aggregate funds of Ukrainian citizens continued to grow, at that for the 2nd quarter their growth was the highest among all categories of depositors, both in absolute and relative terms; this increased their weight in the NAV of the sector to 77.5%. These investors increased their funds the fastest in venture CII among the various sectors of CII, where they also led among all categories of depositors in terms of dynamics of savings in this period, and their weight at the end of June increased to 10.3%.
CII asset structure in the 2nd quarter of 2018 showed a decrease of both aggregate value and weight of securities in assets, although their weight increased in interval funds and in closed-end funds with a public issue, and aggregate value increased in interval CII and in closed-end funds with private issue (excluding venture). As at June 30, 2018, in aggregate assets of different sectors of CII securities had from 12% in venture CII to 71% and 86% in open-ended and interval ones, respectively.
CIIs’ rates of return dropped in almost all CII sectors in Q2 2018, but bond funds (diversified and specialized funds with public issue) proved to be resistant to turbulence in the market and even raised their average returns (to +0.9% for the quarter). The leaders in terms of quarterly increase of the value of investments in Q2 2018 were "other" diversified and specialized funds with public issue (+1.7%), while mixed funds showed the lowest indicators among the various CII sectors (-3.0%). Open-ended funds showed an average of -1.6% for the quarter, and for the year it was +17.6%. The leaders by annual rates in June of 2018 were closed-end (non-venture) CII with public issue (+21.0%).
The assets of non-state pension funds under AMC management, unlike the assets of CII, accelerated positive dynamics in Q2 2018 (+3.9%), along with the growing weight of securities in them. As at June 30, 2018 they reached UAH 1,265 M (excluding the CNPF NBU).
Assets of insurance companies under management in the 2nd quarter of 2018 slightly increased (+1.0%) and as at June 30, 2018 amounted to UAH 108 M.
The number of AMC managing pension assets increased (up to 35), and of the NPFs under management themselves remained unchanged during this period (58) - as well as the number of AMCs managing the assets of the IC (2), although the number of insurance companies which transferred their assets under AMC management at the end of June decreased (to 4).