Q3 2018 highlights of the Ukrainian asset & fund management industry

Continued growth of AuM, but first negative net sales in open-ended funds in six quarters

Ukrainian asset management companies (AMCs) had UAH 301 billion (EUR 9.1 billion) of total assets under management at the end of Q3 2018. This represents a 3.9% growth (in UAH terms) for the quarter, 13.4% YTD and 19.4% annually in September (up from 18.4% in June). Of the total AuM, still 99.5% were in the Collective Investment Institutions (CII). More specifically: (in UAH terms) for the quarter, 13.4% YTD and 19.4% annually in September (up from 18.4% in June). Of the total AuM, still 99.5% were in the . More specifically:

• Total assets of ‘established’ CII (formed funds which have reached compliance with the minimal asset value requirement) amounted to UAH 294 billion (EUR 9.2 billion) at end September, having grown by 4.7% in Q3 2018 (in UAH terms). This was largely due to the growing number of formed CIIs thanks to the new corporate funds in the ‘venture’ sector.(in UAH terms). This was largely due to the growing number of formed CIIs thanks to the new corporate funds in the ‘venture’ sector.
• Of the total CII NAV, 96.5% were in the ‘venture’ CIIs*.*.
• All of the categories of publicly offered funds experienced growth in their total NAVin Q3 2018, with strongest growth shown by interval CIIand open-ended CII (+5.0% and +4.3% respectively).in Q3 2018, with strongest growth shown by interval CIIand (+5.0% and +4.3% respectively).

Number of AMCs in Ukraine rose just by one, to292 over the Q3 2018, with 277 AMCs having CII under management, with still 10 of them dealing with acting 17 open-ended funds. 2018, with 277 AMCs having CII under management, with still 10 of them dealing with .

Meanwhile, the total number of ‘established’ CIIs increased for the forth consecutive quarter, to 1209 funds. increased for the forth consecutive quarter, to .

Number of investorsin all CII, has declined by 0.1% in Q3 2018.There were 464 non-resident investors (mainly institutional/corporate ones) in all funds at end September(down from 466 at end June). They still comprised 0.2% of all theCII investors and were holding 24.% of their total NAV (down from 24.8% in June). (mainly institutional/corporate ones) in all funds at end September(down from 466 at end June). They still comprised CII

In open-ended CII:

• Total NAV rose by 4.3% to UAH 87 million in Q3 2018 (17% YTD and 22% annually), which was fully attributed to the appreciation of the funds’ portfolio investments. to in Q3 2018 (17% YTD and 22% annually), which was fully attributed to the appreciation of the funds’ portfolio investments.
• Quarterlynet sales reversed to negative in Q3 2018 for the first time since Q1 2017 amounting to -UAH 1.5 M, while the annual net sales remained positive, with UAH 3.5 M of inflowas at end September (down from UAH 7.6 M inJune). reversed to negative in Q3 2018 for the first time since Q1 2017 amounting to -, while the as at end September (down from UAH 7.6 M inJune).
• Domestic retail investorshad77% in these funds’ NAV and comprised 98% of all of the investors in the sector as at end Q3 2018.and comprised 98% of all of the investors in the sector as at end Q3 2018.
• There were aslo 9 foreign investors (non-residentinstitutional/corporate and individual ones) in these funds – up from 8 as at end June 2018. They still comprised 0.5% of all open-ended funds’ investors while raising their holdings to 14.0% of their total NAV. (non-residentinstitutional/corporate and individual ones) in these funds – up from 8 as at end June 2018. They still comprised

Non-state Pension Funds’ assets under management of AMCs (III-pillar NPFs,excluding the National Bank’s corporate pension fund) grew to UAH 1,329 M asat end September, speeding up quarterly growth to 5.1%in Q3 2018 (but slightly slowed down to 13.5% annually)***. (,excluding the National Bank’s corporate pension fund) grew to asat end September, speeding up quarterly growth to (but slightly slowed down to 13.5% annually)***.

• There remained 35 AMCs managing pension assets of 58 NPFs asat end September 2018, out of which 45 were NPFs of the open type.asat end September 2018, out of which 45 were NPFs of the open type.

Insurance Companies’ assets under management of AMCs accelerated growth to 4.6% in Q3 2018 to stand at UAH 113 million as at end September. This reduced the year-to-date contraction to -8.9%, while the annual dynamics remained positive at 28.8%. as at end September. This reduced the year-to-date contraction to -8.9%, while the annual dynamics remained positive at 28.8%.

• The number of ICs whos assets were managed by AMCs contracted further from 4 in June to 3 in September 2018, while there were still 2 AMCs providing such a service to ICs at the time.

* Venture CIIs are closed-end ‘non-diversified’ funds with private issue only, mainly investing in private equity and debt, with the lowest restrictions on their activity as compared to other fund categories.

** See fund classification at the UAIB website: http://www.uaib.com.ua/eng/abcpeople/cii_manual.html as well as CII Ranking (Collective Investment Institutions (CII) - by fund class): as http://www.uaib.com.ua/eng/analituaib/rankings/ici.html

*** The National Bank’s corporate NPF, which is managed by the NBU itself, had still roughly 50% of the total NPFs’ AuM, based on the data provided by the National Financial Services Commission as at end September 2018.

See more at the UAIB website:

· Q3 2018 report – General figures

· Q3 2018 report – Collective Investment Institutions (in Ukrainian)

· The Ukrainian Fund Market in Figures

The remaining parts of the Q3 2018 report in English to be published soon.

For enquiries, please contact Anastasiia Gavryliuk, Director of International Relations - Senior Analyst, at gavrylyuk@uaib.com.ua..