UAIB Analytical Review of the Asset Management Market in Ukraine in Q4 2020 & FY 2020. General Results

The Ukrainian stock market, along with other world markets, had a turbulent 2020 in the context of the corona crisis. The market fall in late March-early April and the subsequent sideways trend through the end of October were followed by rapid growth in last months of the year, which brought the key local stock index to leaders both in world markets in general and in emerging markets. The macroeconomic picture in Ukraine in Q4 and in 2020 generally looked better than expected at the beginning of the crisis, which proved to be relatively lenient for the national economy and the financial sector. Several legislative and regulatory initiatives adopted in Ukraine during 2020 have helped soften the negative effects of the pandemic and lockdowns to overcome them. Several special laws, which were adopted this year in the context of European integration, were aimed at further development of the stock market. However, government bonds remained the most popular tool among retail and institutional investors.

Against this background, the asset management industry in Ukraine in 2020 accelerated growth, which was still mainly due to funds with private placement (venture CII) in terms of both quantitative and asset value aspects. However, open-ended CIIs, one of the smallest sectors, received significant capital inflows and the largest relative increase in net assets in 2020.

Number of market participants

Asset Management Companies (AMCs)

In Q4 2020, the total number of asset management companies grew by three and amounted to 303, i.e. ten more than at the beginning of the year. During January-December, 16 new AMCs were created, including 5 in the last quarter.

279 AMCs managed from one to the 61st fund, and almost 99% of such AMCs managed at least one venture CII.

Collective investment institutions (CII)

In Q4 2020, 65 new CII were registered, and for the whole year - 221, ie 71% more than in 2019.

The number of CII that reached the minimum asset ratio (formed) grew for the 13th consecutive quarter and at the end of 2020 amounted to 1,478 (+ 2.4% for Q4 and + 11.5% for the whole year).

Non-state pension funds (NPFs)

The number of NPFs under management as of December 31, 2020 remained at the level of 59 (excluding the corporate fund of the NBU), including 47 open, 6 corporate and 6 professional. A total of 34 AMCs managed NPF assets.

Insurance companies (IC)

The number of insurance companies that transferred their assets to AMC management and the number of AMCs that provided such services did not change during 2020: as of December 31, 2020, one such company managed the assets of two insurance companies.

Assets in management and NAV

All institutional investors

Total assets under AMC management grew by 6.1% in Q4 and as of December 31, 2020 reached UAH 424,723 million. Thus, for the whole of 2020, they increased by 19.6%.

Collective investment institutions (CII)

In Q4 2020, the total assets of all CII under management, including those that have not yet reached the standard, also grew by 6.1% and 19.6% for the whole year, to UAH 422,594 million.

As of December 31, 2020, the assets of current CII, which reached the minimum asset ratio (formed), amounted to UAH 414,193 million. In Q4 2020, they grew by 5.0%, and for the whole year - by 22.1%.

Venture funds continued to make the most significant contribution to both the quantitative and cost growth of the CII industry. Their assets in 2020 increased by 23%. However, the largest relative increases this year was in open-ended CII: + 43%.

The total net capital movement in open-ended CII in Q4 2020 was positive for the fourth time in a row and amounted to UAH 3.9 million. This provided the largest annual net inflow to the sector since 2010 in 2020: UAH +18.0 million.

The value of net assets of all formed CII as of 31.12.2020 reached UAH 322,029 million. In Q4, it grew by 4.0%, and for the whole of 2020 - by 23.3%.

Non-state pension funds (NPFs)

NPF assets under AMC management Q4 2020 slowed down to 0.6%, and accelerated to 20.0% for the whole year. As of December 31, 2020, they reached UAH 1,924 million.

Insurance companies (IC)

The assets of the IC under the management of AMC increased by 5.4% in Q4, and for the whole of 2020 - by 76.6%. As of December 31, 2020, these assets amounted to UAH 171 million.