In 2023, the volume of endowment funds managed by management companies grew by only 5.6%

The volume of endowment funds managed by management companies grew in 2023 by only 5.6%, to RUB 143.2 billion. The number of such funds increased by more than 16%, to 355, mainly due to small funds. Managers note increased transparency in the distribution of such funds, which has a beneficial effect on the competitive environment. In conditions of isolation of the Russian economy, experts say, market growth will continue primarily due to large capitals.

The National Endowment Association (NAE) has summed up the results of 2024 in terms of trust management (TM) of endowment funds (endowment funds used to finance non-profit projects). According to the NAE study, in the second half of the year, the assets of such funds increased by almost 4%, to 143.2 billion rubles. In general, for the year the figure increased by 5.6%, which is many times lower than in 2022 (see “Kommersant” dated March 27, 2023).

During the reporting period, there were noticeable capital movements between management companies. The strongest growth in assets is observed at the Ronin Trust Management Company with less than 1 billion rubles. up to more than 15 billion rubles. The growth occurred due to the target capital of the Vladimir Potanin Charitable Foundation. In recent years, we have seen a steady trend of asset growth in the endowment fund market, both due to the emergence of new large participants and the quantitative growth of funds in general, says Ekaterina Zaitseva, CEO of Region Asset Management.

The total number of endowment funds grew by 50 last year to 355, according to NAE data. Almost all management companies were able to expand their client base, with TKB Investment Partners and Pervaya Management Companies performing the best, the number of target funds in which increased by 10, to 39 and 31, respectively. Dmitry Pigarev, head of the department for working with target capitals and corporate clients at TKB Investment Partners, said that the bulk of the target capital was up to 20 million rubles.

Director of the Philanthrope endowment fund Lyudmila Panteleeva notes that last year, endowment funds were opened not only in traditional areas of support, such as education or culture, but also in fundamentally new areas. In particular, last summer, Russia’s first environmental fund for nature reserves appeared.

A strong decrease in the number of funds occurred only at VIM Investments Management Company – from 93 to 88, but even after this it remains the largest management company in terms of their number. The company explained the changes by the planned dissolution of several target capitals that were created for a deadline.

Market participants note a qualitative improvement in the competitive environment. According to Vladimir Zelenov, head of institutional and corporate clients at Alfa Capital, the choice of a management company is most often determined by its actual management results and approaches to risk control. In addition to this, fund managers evaluate forecasts and proposals from management companies. “Instead of behind-the-scenes selection of management companies, many endowments now do this on an objective competitive basis, realizing the risks of investing depending on the fund’s strategy,” notes Vadim Soskov, deputy general director of AAA Capital Management.

One of the key drivers for further growth in the number of trust funds and the volume of assets will be the continuing isolation of the Russian economy. In these conditions, large capital has nowhere to go, and it is forced to look for use internally, including in the form of charity. In addition to this, as Dmitry Pigarev notes, many capital holders use endowment funds to package their non-profit initiatives with the goal of inheriting the affairs of the future generation. One of the growth points could be personal funds, an analogue of Western trusts. “Thanks to them, capital owners have the opportunity, without turning to other jurisdictions, to preserve and increase what they have, to financially provide for specific people,” says Natalya Simina, vice-president of Management Company Pervaya.

Although the main driver of industry growth remains donations from large private philanthropists and companies, more and more companies are beginning to look at broad retail. Active retail donors will help level out the growth rate of endowments, according to VIM Investments, by reducing their dependence on the goodwill of a small number of potential large patrons.

Vitaly Gaidaev