Citizens invested in money market mutual funds at record levels

October was a successful month for the collective investment industry – the net inflow of funds into retail mutual funds exceeded RUB 36 billion, which is double the September result and the third monthly result in history. Citizens contributed the most funds to money market funds that deal with short-term financial instruments. In the coming months, according to experts, the attractiveness of such funds will remain: stock funds lack stability and high dividends, while bonds lack a reduction in inflation expectations.

Last month, investors significantly increased activity in the collective investment market. According to Kommersant’s estimates, based on Investfunds data, the net inflow of funds into all retail funds (open-end and exchange-traded mutual funds) exceeded 36 billion rubles. This result is more than double the September figure (RUB 16.7 billion) and the third monthly result in the history of the industry in general. Citizens brought more to mutual funds only in December 2020 and February 2021 – 40.5 billion and 38.3 billion rubles. respectively.

This year, October became the eighth month in a row with a positive result; during this period, retail funds received over 107 billion rubles.

The main beneficiaries of the attractions remain money market funds (investing funds of shareholders, as a rule, in debt securities, such as OFZ, for short periods, using a repurchase mechanism, or repo). The net inflow into such funds amounted to almost 39 billion rubles, which is 72.5% higher than in September.

At the same time, outflows from riskier equity funds increased – from 1.4 billion to 2.5 billion rubles. Mixed investment funds lost 2.8 billion rubles in a month. against 1.1 billion attractions in September.

Against the backdrop of a cycle of tightening monetary policy by the Central Bank, money market funds have been considered by investors for several months as a “safe haven” into which funds from other assets are transferred.

“Money market instruments, and with them the funds that invest in them, allow you to obtain returns at or slightly higher than current deposit rates, but the main thing is that this is a more flexible instrument, since you can exit it at any time without loss accumulated income,” notes General Director of Management Company “Pervaya” Andrey Bershadsky.

Retail investors also put more into bond funds than they took out, for the first time since June. At the end of October, net attractions to all funds of this type amounted to 842 million rubles, the maximum positive result this year, but almost six and a half times lower than the outflow of September. The main attraction went to funds of foreign currency bonds, Eurobonds, replacement and yuan bonds (net attraction – over 8 billion rubles). Such investments, according to the director of the asset management department of Alfa Capital Management Company Viktor Bark, are attracted by exposure to foreign currency through investments in bonds of Russian issuers that are traded on the Moscow Exchange. “Investments do not have the infrastructure risks of classic Eurobonds, protect investors from the weakening of the ruble and provide an interesting return of 7.4% in foreign currency with a duration of 4.7 years (data as of October 31),” notes Mr. Bark.

Participants in the collective investment market are not currently afraid of traditional competition with bank deposits.

The Central Bank’s forecast corridor for the key rate of 15–15.2% by the end of the year indirectly indicates a possible increase in deposit yields. “Increasing rates can slow down the influx of funds into mutual funds, but we do not think that the latest changes in rates will greatly affect the inflow into funds until the end of the year,” notes Ivan Lavrinenko, investment director at Era Investment Management LLC. The fact is that if the period of a high key rate turns out to be long, then money market funds, the profitability of which depends on it more directly than the profitability of deposits, will remain attractive.

Interest in equity funds can be supported by dividends from large Russian companies, primarily oil and gas companies. Another driver is news about the continuation of redomiciliations. In early November, it became known that HeadHunter announced to investors plans to re-register the company in Russia. Andrey Bershadsky sees prospects for the stock market to grow by 30% by the end of 2024. “Of this, 20% will come from share price growth, and 10% from dividend yield,” he notes.

But stable interest in ruble bond funds will appear only after the cycle of raising the key rate or the Central Bank signals about it is reversed. “As inflation slows and inflation expectations decline, bond funds will become more interesting, and it is likely that some shareholders of money market funds will switch to these instruments,” predicts Victor Bark.

Vitaly Gaidaev