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Performance of the Collective Investment Institutions in Q1 2015 17 June

The key trends of the Ukrainian co-investment industry in Q1 2015 were as follows: number of AMC and funds under management, as well as number of investors in the market in general continued to decline, although in the venture funds inflow of investors and strong growth of NAV recovered; weakening of capital outflows from open-ended CII continued, while increasing yield and reducing the share of securities, that affected all sectors of CII.

Number of AMC in January-March 2015, according to UAIB, decreased from 336 to 330 companies, new AMC did not enter the market during the quarter.

Number of CII declined: the registered ones - from 1,569 to 1,563, and the number of CII that reached compliance with the minimal asset volume standard - from 1,188 to 1,177. This was due to the dynamics of open-ended (-4), closed-end non-diversified UIF and CIF, and venture UIF (-3 each). At the same time, the number of open-ended and interval specialized CII grew (by one each) – through changing the type of pre-existing diversified funds of these types.

Assets of CII in the first quarter of 2015 increased by 90% due to venture capital funds, the remaining growth was provided mainly by other closed-end CII, although open-ended funds returned to growth (the first time in 3.5 years). Total assets of CII for the three months increased by UAH 6871 mln (+3.33% after +0.5% in Q4 2014) and, as of 31.03.2015, amounted to UAH 213,229 mln, including venture funds – UAH 201,651 mln.

NAV returned to growth following a slight reduction in the 4-th quarter of 2014. Growth bypassed again only interval CII. The total net assets of all funds increased by UAH 5024 mln (+2.8%) to UAH 185,428 mln, venture ones – by UAH 4365 mln (+2.6%) to UAH 174,403 mln.

The capital outflow from the open-ended CII during the first three months of 2015 was replaced by inflows, but finally the net capital flow for the quarter amounted to -UAH 1.57 mln (after -UAH 1.75 mln in October-December 2014). This is 9 times smaller than a year ago. In addition, the negative rate of investors’ capital movement in the sector once again was defined by one of the funds, which quarterly result surpassed the rate of all sectors. The number of funds with a net inflow of capital increased.

The investors of CII in the 1st quarter significantly changed their vision of industry’s prospects: Ukrainian depositors - legal entities expanded their presence in the funds, in particular, in venture ones and other closed-end funds, partially offsetting the outflows in the 4-th quarter of 2014; natural persons - accelerated increase of investments in venture CII, but non-residents - weakened it. Assets of Ukrainian citizens in open-ended CII increased for the first time since the 2nd quarter of 2014.

As of 31.03.2015, domestic corporate investors had the greatest share in CII in terms of volume of assets; their share decreased for the quarter from 76.2% to 76.0%, while retail investors increased it from 6% to 6.2% (as of 31.03.2014).

The asset structure in the 1st quarter of 2015, the same as the year ago, continued to show decline in the proportion of assets in securities in all sectors of CII, except interval ones. Equity instruments accounted for 25.8% of the aggregate portfolio of assets in venture funds and 48.9% – in closed-end ones to 64.5% and 75.1% – in the open-ended and interval funds. The share of "other" assets in venture CII increased from 69% to 70% due to their escalating by UAH 7,118 mln. 

The rates of return of CII as a whole increased over the quarter in almost all sectors. Among the main factors there were - rapid short-term growth in the stock market, the impact of which was limited by the share of assets in equities, which, in particular, increased in open-ended CII for the quarter from 39% to 41%. These funds were leaders among the sectors by types of CII with an average surplus of certificates by +6.7% (after +0.5% in Q4 2014). Meanwhile interval CII were relatively less profitable again (+2.4% after -2.2%).

The share of the funds which provided increase in the value of investments in the 1-st quarter of 2015 increased among the open-ended funds from 46% to 71% (17 funds), among interval ones- from 25% to 61% (14 funds), closed-end non-venture funds – from 31% to 46% (38 funds). Closed-end (non-venture) CII with private issue for the quarter yielded an average of +2.3% (after -5.1% in Q4 2014), and ones with a public issue – +4.8% (after +18.0%).

Among diversified publicly offered CII by the classes of funds, as well as among all sectors of CII by the various grounds of classification, bond funds, that doubled the yield of the class for the quarter (+13.6%), led again. Equity funds in Q1 2015 provided an average income +3.8% (after -2.9% in the previous quarter) and thus outstripped only mixed investment funds (+1.5%, after -2.3%).

There were no money market funds, according to the defined criteria by the actual structure of assets at the end of the quarter, for the seventh consecutive quarter.