Retail investors build up their investments in UIFs in Q1

Source: Central Bank of the Russian Federation in English

22 May 2020

In the first quarter, the portfolios of unit investment funds (UIF) for non-qualified investors expanded by 1.7% to 916.5 billion rubles, according to the new issue of the information and analytical review UIF Market Trends. However, the overall portfolio of UIFs contracted by 6.5% over the quarter, totalling 4.184 trillion rubles. This shrinkage was caused by the decline in the asset value of funds for non-qualified investors.

Although the majority of retail funds faced a decrease in their returns in Q1 due to the turbulence in the market, investors’ interest in them continues to grow owing to declining deposit rates and the development of online distribution channels. The net asset value (NAV) of open-end funds increased by 4% to 473.1 billion rubles, and that of exchange-traded funds — by 37.0% to 23.2 billion rubles.
Open-end funds’ weighted average returns (a quarter-over-quarter change in the NAV per unit) equalled —3.9%, including —0.7% recorded by Russian bond funds that are most popular among retail investors. In 2020 Q1, open-end UIFs focused on foreign bonds achieved high returns (14.3%) primarily as a result of increases in foreign currency exchange rates, while Russian equity funds’ returns declined the most (—19.3%). Open-end UIFs focused on exchange-traded funds’ (ETF) units substantially increased (by 26%) the number of issued units, largely owing to funds investing in gold-focused ETFs and demonstrating best returns in Q1. Nonetheless, these funds are still not the most widespread ones.
As to the investment structure of funds for non-qualified investors, the value of shares and depositary receipts for shares significantly decreased by 10.7% to 198.3 billion rubles, while investments in government securities materially expanded by 31.5% to 68.2 billion rubles. These changes resulted from the revaluation of shares amid the pandemic, the key rate reduction, and increased demand for conservative instruments during the period of volatility.
Preview photo: Amenic181 / Shutterstock / Fotodom