Q3 2019 highlights of the Ukrainian asset & fund management industry

Ukrainian asset management companies (AMCs) had cca UAH 350 billion (EUR 13.3 billion) of total assets under management at the end of September 2019. This represents a 3.3% growth in UAH terms (and 16.6% in EUR terms[1]) for the Q3 2019, up from 0.7% in Q2. Year-to-date in September, the AuM have grown by 11.2% in UAH terms and annually, by 16.4% (down from 17.1% in June).

Of the total AuM, 99.5% were the assets of the Collective Investment Institutions (CII), which consequently have shown the same pace of growth in Q3 2019, 9M 2019 and annually as total AuM.

More specifically:

• Total assets of ‘established’ CII (formed funds which have reached compliance with the minimal asset value requirement) amounted to UAH 340 billion (EUR 12.9 billion) at the end of September 2019, having grown by 3.3% in Q2 2019 in UAH terms (down from 3.7% in Q2), by 14.5% YTD and by 15.8% since September last year (down from 17.3% in June).
• New ‘venture’[2] CIIs remained key drivers of the expansion (+4.3% of their AuM and +4.7% of the NAV, up from +3.7% in Q2), in particular the corporate funds of this category. The share of these CIIs in the total CII NAV kept growing, from 94.1% in June to 95.0% in September (though still lower than in September 2018, 96.5%).
• Interval funds also demonstrated some AuM and NAV growth in Q3 (+5.0% and +5.4% respectively) while other fund sectors’ assets and NAV contracted.
• Among the categories of publicly offered funds[3], open-ended CIIs were still in the negative territory in Q3 2019 in terms of their total NAV, although its contraction was very limited; net assets of the closed-end CIIs with public offering declined more significantly (-4.7%) as the number of such funds also contracted (-3.1%).

Number of AMCs in Ukraine declined by one in Q3 2019, to 294. Out of those, 282 AMCs had at least one and up to 45 CIIs under management as at end September, while 10 AMCs still had 17 acting open-ended funds.

Number of ‘established’ CIIs increased for the 8th consecutive quarter, to 1284 funds (+2.0% in Q2 2019).

Number of investors in all CIIs, has again marginally declined in Q3 2019 (-0.04%), mainly due to the dynamics in ‘venture’ funds; it also contracted in closed-end funds (mainly those with private placement) and also in open-ended funds; meanwhile there were slightly more investors (resident retail ones) in the interval funds at the end of September than in June.

• There were 437 foreign investors (mainly institutional/corporate non-residents) in all funds at end September 2019 (down from 455 in June). They still comprised around 0.2% of all of the CII investors and were holding 22.2% of their total NAV (down from 22.9% in June).

In open-ended CII:

• Total NAV marginally contracted by 0.2% in Q3 2019 (after -1.5% in Q2), but more significantly from the start of the year until the end of September (-1.8%) and went into negative territory annually (-1.9%, down from +2.5% in June), to stand at UAH 85.8 million. The quarterly decline was mainly due to the prevailing negative market dynamics in Q3 which affected the funds’ portfolio valuations, while the capital flow was generally positive, if very small.
• Net sales were positive for the first time in the past 5 quarters in Q3 2019 (+UAH 0.05 million, after -UAH 1.5 million in Q2). The annual net sales remained negative but contracted to -UAH 3.9 million as at the end of September 2019 (from -UAH 5.5 million in June).
• The total number of investors in open-ended funds declined by 0.8% in Q3 2019 (same as in Q2). Domestic retail investors had 79.2% of these funds’ NAV in September (down from 80% in June) and comprised 98.5% of all of the investors in the sector.
• Foreign investors in these funds still comprised 0.3% of all their investors in September 2019, while their share in total sector’s NAV slightly contracted from 10.7% to 10.4% in Q3 2019.

Non-state Pension Funds’ assets under management of AMCs (III-pillar NPFs, excluding the National Bank’s corporate pension fund[4]) grew to UAH 1,550 million as at end September 2019:

·Total NPF AuM growth slowed down to 3.0% in Q3 2019 (from 5.6% in Q2) and to 16.6% annually (from 19.0% in June), with open-type funds traditionally being the main driver (+2.8%) representing 73.5% of total NPF AuM (ex. NBU’s fund).

·There were 33 AMCs (same as in June) managing pension assets of 60 NPFs as at end September 2019 (up from 58 in June), out of which 47 were NPFs of open type, 7 of corporate and 6 of professional ones.

Two Insurance Companies’ assets under management of one AMC grew by 5.4% in Q3 2019 to cca UAH 98 million as at end September 2019 (up from +3.5% in Q2) having grown by 22.4% YTD, but contracted by 13.2% annually.

See more at the UAIB website:

·The Ukrainian Fund Market in Figures

·UAIB Analytical Review of the Asset Management Market in Ukraine in Q3 2019. General figures (available in Ukrainian: УАІБ: Аналітичний огляд ринку управління активами в Україні за 3-й квартал 2019 року. Загальні результати)

English versions of all parts of the Q3 2019 report to be available later.

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

(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.

(2) Venture 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.

(3) See fund classification at the UAIB website: https://www.uaib.com.ua/en/invest-in-ukraine/manual/cii-manual.

(4) The National Bank’s corporate NPF, which is managed by the NBU itself, had 47.8% of the total NPFs’ AuM, based on the National Financial Services Commission and UAIB data.