THE ART OF INVESTING
Nine of the 63 mutual funds and investment companies for which data could be found in the website of the Bulgarian Association of Management Companies, reported positive yields from the beginning of 2008 till the end of September, the BANKER weekly found. But the yield of not a single mutual fund exceeded the officially reported inflation rate in our country which was 6.3% in the January-August period.
Collective investment schemes with the biggest number of representatives (7 in all) are among the leaders. They are within the group of mutual funds with a conservative risk portfolio, followed by investment companies. In view of the current development on the exchange the biggest slump was registered by companies which have focused on investments in shares.
The highest yield - 6.01% - was realized by Elana Fund Monetary Market and in end-September it was among the few companies which succeeded to increase the value of attracted assets and they amount to BGN19.983MN at present, up from BGN15.704MN in the end of the first six months of 2008. The fund's yield since its IPO (October 31, 2007) is 7.08 per cent. The mutual funds DSK Standard (a fund in bonds) and Raiffeisen (Bulgaria) Bonds Fund also had good results and made happy those who trusted them. The first one realised a 4.87% yield and the second one - a 4.13% yield for the first nine months of the year.
As expected, most of the funds have reported negative results this year. That trend is especially visible in high-risk profile funds. The crisis on global markets has continued to deepen and its negative impact can be already felt in Bulgaria as well. Foreign investors continue to withdraw and domestic institutional and private shareholders are seeking opportunities to reduce or minimize their losses. As a result we are witnessing a drop in the quotations of public companies on the Bulgarian exchange and of indices as well.
Open type investment companies show a 23.44% drop of the total volume of attracted assets which amounted to BGN91.013MN in end-September. Although no new companies of that type were licensed in the last two years, their performance was fair and the interest towards them as an opportunity for investment remains. TBI Eurobond (a fund in bonds) and Elana Eurofund (also a fund in bonds) ensure highest yields to their shareholders - respectively 4.37% and 3.95%, and the former has even increased its portfolio by BGN178,944 from June 2008.
The global crises has made many people more careful towards investments, both of their personal and corporate money. The interest towards risky investments gave way to the thorough analysis of financial products. That led to withdrawing of money from high-risk funds and directing them to calmer, balanced and conservative mutual funds.
Bulgarians tend to prefer security. That is perhaps the reason why in the present turbulent time and after the slump on the capital markets, they have again turned to bank deposits despite the lower yields from them. The fact that a deposit up to BGN40,000 in a credit institutions is guaranteed by the Bank Deposit Insurance Fund counts too. Moreover, interest rates on deposits have been moving upwards in recent months due to the higher needs for fresh financial resources on the part of banks and the more limited access to liquid funds from abroad.
It's hard to assess what part of the money withdrawn from high-risk mutual funds has been divided between saving deposits and balanced and low-risk funds. The more so that the high inflation rate has led to higher living costs (for food, bills etc.).
The domestic capital market remains unstable, dependent on international news concerning oil, foods and global policy. On that background a rational distribution of money remains that between the three groups of assets according to their liquidity, i.e. highly liquid (bank deposits), medium-term (mutual funds and/or stocks), and long-term (real estates).