Stakeholders waited for profitability
In March, for the first time since the beginning of the year, a solid inflow of funds was recorded in the collective investment market. In almost all mutual funds, the value of the unit has increased. Low deposit rates are forcing private investors to look for alternative ways to protect against inflation. What returns can retail funds bring in the second quarter of 2023?
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As estimated by Investfunds, in March, citizens invested almost 5 billion rubles in open and exchange-traded funds, while in February private investors withdrew about 100 million rubles. This is the first positive result since the beginning of the year.
For three months in a row, funds focused on the high-tech sector remained among the growth leaders. As Alexander Dzhioev, an analyst at Alfa Capital, explained, this is due to the weakening of the ruble and the corresponding currency revaluation of assets within such funds, as well as to the overall growth in the US markets, in particular on the Nasdaq. “In the first quarter, the leaders in attracting assets were mixed investment funds, which optimally combine income potential with moderate risk (more than 13 billion rubles of attracted assets),” Alexander Lavrov, investment director at East-West Management Company, told MK. In his opinion, according to the results of the first quarter, real estate funds are among the outsiders in terms of profitability.
“Now investors are focusing mainly on funds that do not carry infrastructural risks. Great demand is observed in the money market sector, that is, in a direct alternative to deposits,” said Mikhail Kuzin, investment director at BCS Mir Investments.
So far, in general, shareholders are beating investors in terms of real profitability. According to Investfunds, last March, only 3 out of 182 large retail funds with assets over 500 million rubles. share price decreased. Almost half of the mutual funds provided a return of more than 5%, while the top 20 share value increased by more than 10%.
In addition to high-tech, funds focused on investing in gold assets (bars, gold ETFs, shares of gold mining companies) brought decent profits. In March alone, shares of such funds went up by 10-14%. This trend should not be surprising: in March alone, the price of gold at the auctions of the Moscow Exchange exceeded 5 thousand rubles. for 1 gram, and on the world market for a troy ounce they gave about $ 2 thousand, which is close to historical maximum values.
It is difficult to say how long the growth of the precious metal quotes will continue. But, according to Alexander Lavrov, against the background of the weakening influence of the United States in the world and the gradual displacement of the dollar from world trade, gold is the asset that is worth having in your portfolio. “Gold performed well against the backdrop of problems in the banking sector in the US, increased volatility in the market is always positive for precious metals, it may also manifest itself in the second quarter,” Kuzin noted.
Senior investment consultant at FG Finam Timur Nigmatullin thinks differently: «Given the slowdown in global inflation, gold quotes may turn around, showing a downward trend.»
The profitability of funds for gold consists of two factors: the ruble exchange rate and the cost of the most precious metal, Alexander Dzhioev recalled. In his opinion, the increased global demand for gold as an asset for diversification will act as a supporting factor for such mutual funds. “At the same time, the weakening of the ruble exchange rate is not sustainable and long-term, which will negatively affect the ruble yield of gold funds. The final result will depend on a combination of these factors,” the analyst concluded.
Experts predict a further increase in the price of gold to $2.2 thousand per ounce by the end of the year.
We note that the currency revaluation had a beneficial effect on bond funds, whose assets are Eurobonds, which also replace yuan bonds. “That positive in currency funds for bonds, which was observed in the first quarter, is largely due to the weakening of the ruble and currency revaluation. The reverse trend may occur if the ruble strengthens. But the factor of gradual popularization of these funds will contribute to the inflow of new money into them, maintaining the level of assets in the funds,” Alexander Lavrov is sure.
There are other points of view. “In April, we see the continuation of the trend for the weakening of the national currency. Probably, at the end of the period, the income of the funds will also reflect the currency revaluation. OFZs continue to fall in price, the Ministry of Finance is “flooding” the market with supply, yields have fallen far short of a fair estimate. Given the budget deficit, changes are unlikely here,” Timur Nigmatullin believes. According to Dzhioev, the current weakening of the ruble is short-lived. Accordingly, the currency revaluation factor is unlikely to support such funds in Q2.
“Now is the start of the dividend season, which usually encourages the growth of stock indices and the influx of investors into the market. Accordingly, one can think about acquiring mutual funds for the stock market, both for the broad market and for the oil and gas sector, especially given the growth in oil prices and market expectations for dividends,” Dzhioev said.
According to Mikhail Kuzin, in the current environment, non-primary sectors of the Russian economy are more attractive and predictable, but exporters can still be positively surprised in the current lack of transparency.
— The results of the work of management companies and mutual funds for the 2nd quarter will largely depend on a number of factors: the foreign policy situation, dividend history, etc., — stressed Alexander Lavrov. — Dividend stories in the stock market are important for long-term investors. Current share price levels give investors hope for double-digit dividends. If the market is supported by positive, then we should expect a reinvestment of dividends in shares, an influx of new investors inspired by high interest rates. If many companies decide not to pay dividends, we will see investor disappointment and, as a result, a serious drop in share prices and an outflow of funds from share mutual funds in the first place.
Given the wide range of risks, according to Nigmatullin, the only the type of funds of interest to the conservative investor are money market funds, which will be the direct beneficiary of a rate hike or increased volatility.