Foreign funds are being washed out – Newspaper Kommersant No. 166 (7367) dated 09/09/2022

Against the backdrop of high infrastructure risks, management companies began to reduce investment in mutual funds in foreign assets. By the middle of the year, the share of foreign securities in mutual funds available for investment decreased by 5.5 percentage points to 77.5%. The share of ruble assets increased from 11.7% to 13.8%. However, only a few companies purposefully change the investment declarations of funds.

Kommersant analyzed the statements of 37 traded mutual funds focused on investments in foreign assets. The value of their net assets (NAV) in the second quarter amounted to about 50 billion rubles, having halved since the beginning of the year.

The main reason for the fall was a sharp decrease in the value of securities of foreign companies – from 79.2 billion to 44.1 billion rubles. As a result, their share decreased by 5.5 percentage points to 77.5%. This was due to the fall in dollar quotes (in the first half of the year, the S&P 500 and NASDAQ indices fell by 20% and 48%, respectively), as well as the depreciation of the dollar in the Russian Federation by 31%.

At the same time, the share of Russian securities increased noticeably, from 11.7% to 13.8%. Even against the backdrop of a 40% fall in the Moscow Exchange index, some managers increased their investments in ruble assets. At the same time, the share of precious metals in these funds increased (from 2.9% to 4.4%) and accounts receivable (from 2.4% to 3.6%). “Risks and uncertainty do not allow managers to keep their former shares of foreign assets in non-blocked funds,” says Vladimir Bragin, director for analysis of financial markets and macroeconomics at Alfa Capital.

A number of management companies, in particular RB Capital and Arikapital, also went for a complete reformatting of funds from foreign currency to ruble.

According to the results of the first half of the year, the share of foreign assets in the two funds of these management companies fell from 78% to 8.8% and from 99% to 2.6%, respectively. As Oleg Galkin, CEO of RB Capital, explained, in July the fund was completely reoriented to Russian assets due to the fact that existing restrictions did not allow the implementation of the fund’s originally announced investment strategy and in order to protect the interests of shareholders. “In order to minimize the risks of clients, we decided to sell all non-blocked assets and did this in the summer,” says Alexei Tretyakov, head of Arikacapital.

Representatives of the Central Bank have repeatedly drawn attention to the risks of investing in foreign securities. At the beginning of the week, the regulator sent brokers an order to impose restrictions on transactions for unqualified clients with securities of issuers from unfriendly countries (see “Kommersant” dated September 7). However, such restrictions do not apply to mutual funds. Therefore, as Ruslan Muchipov, General Director of Tinkoff Capital, noted, when making decisions on investments in foreign assets from unfriendly countries, they will, as before, be guided by the opinions of analysts and the actions of clients. “MCs independently decide on the time, necessity and expediency of selling foreign assets,” the Bank of Russia noted.

The restrictions imposed by the Central Bank will lead to a narrowing of investment opportunities, since there are no companies in many sectors of the economy on the Russian market.

In addition, as Oleg Galkin notes, clients still have a request for country and currency diversification. “If the client’s investment philosophy has changed, he can always either exchange shares of one fund for shares of another fund, or sell shares of a fund with foreign assets and buy a fund with assets in rubles,” says Director of Sales Support and Customer Experience at BCS Mir investments” Andrey Vereshchagin. “A forced change in the fund’s strategy can lead to a mass exodus of dissatisfied clients, so managers of large funds cannot afford this,” a source on the market notes.

In the majority of those polled by Kommersant, the management companies said that in the future they plan to launch, first of all, funds for ruble assets, as well as securities of foreign issuers from friendly countries. So far, only 12 securities listed in Hong Kong are traded on SPB Exchange. “As the list of such assets expands, we will actively use them in our products. We will actively use bonds of Russian companies denominated in yuan,” said Andrey Vereshchagin. Alexey Tretyakov did not rule out a return to the original investment declarations, but in the event that a reliable infrastructure for such investments appears.

Vitaly Gaidaev