The Mutual Funds Take the Best of the Stock Exchange

The open mutual investment funds have benefited in July from an unusual effervescence for the summer of the Stock Exchange. Placing savings on this route brought a much larger profit than the interests did.

The clear assets of the 19 open investment funds reached 236.8 million new lei (RON), approximately 66.4 million euros, at the end of last month, according to a report of the National Union of the Organisms for Collective Investment (UNOPC). In the past 12 months, more than 67.000 persons have benefited from an increase by approximately 15.6% of the unit value of a fund certificate, which is much more than the inflation of that period, 9.3%.

PROFITS. Due to the effervescence of the activity at the Stock Exchange, the funds that focus on share transactions, as well as the funds with diversified investments were the ones that were the most profitable. The latter invest in shares as well as in debentures and treasury certificates, or in banking deposits. The monetary funds can invest only in banking deposits.

In July, the monetary funds and, with one exceptions, the ones that invest in debentures and treasury certificates have recorded performances inferior to the inflation (less than 1%) in the terms of the unit values of the certificates emitted for each. In the same time, the titles of the share funds have increased by 6.95%, and the ones of the diversified funds by 5%.

The discrepancy between the funds that depend on the interest market and the ones that depend on the Stock Exchange became greater in proportion as the official monetary strategy led to excesses of cash deposits, and to interests that, even in the case of the small banks, have begun to offer no more protection against the inflation or profit. The situation of the banking investments has also got worse because of the interest tax, which got ten times greater.

THE CASTLING. Even though it might seem a paradox, the share funds are the most successful, but occupy only 14.9% of the market of the mutual funds (of the total value of the clear assets). The diversified funds aren’t leaders either, their quotation being at 27.9%. Even though they seem to lose some ground, the monetary and debenture funds remain the leaders with 56%. The latter have the lowest risk ratio in the market, because the instruments they invest in are the least risky as well. In exchange, investing in stocks is the most risky, since the stock market can have a much more unexpected behavior than the one of the interests. As a conclusion, the fact that the industry of the funds based its re-launch on the investments in interests wasn’t accidental. Even so, the process of re-gaining the public trust after the cataclysm of the frauds from FNI (the National Investments Fund) has been very uphill, this unfairly affecting, still, the activity of the funds. This seems more unfair when we take into account the fact that the important and trusty agents have remained in the market and the ones representing the great banking groups in the country also entered this market.

RISK CLASSIFICATION. The investment funds are for the ones that cannot decide the best targets for their investments. First, the investor has to take into consideration the proper risk tolerance, as well as the proper patience, and the cost of the brokerage, respectively. According to the official classification, the monetary funds have minimum risk rate, and they are 90% investments in banking deposits and 10% in debentures. The risk rate can get to "medium" for the debenture funds, which are allowed to invest 10% of their assets in marketable debentures. The diversified funds have a medium market-risk rate (it is possible to invest up to 45% of the assets in the shares), and the share funds have a high risk.