Money market mutual funds may retain leadership in the first quarter

Last December set a record for the volume of net fundraising in retail mutual funds. According to Investfunds, it exceeded 42.8 billion rubles. As in November, money market funds were in high demand. Against the backdrop of an increase in the key rate, private investors are using money market mutual funds to temporarily allocate liquidity as an alternative to bank deposits. In the first quarter, interest in such funds will continue, since high inflation in the country will not allow the Central Bank to begin easing policy before the second or third quarter, experts believe.

Investfunds data indicate that December was a successful month for management companies: the net inflow of funds into retail mutual funds (open-ended and exchange-traded funds) exceeded 42.8 billion rubles, which is almost 0.3 billion rubles. exceeded the previous record (see “Kommersant” dated December 11, 2023). In general, for the year the net inflow of funds from private investors into retail mutual funds exceeded 192 billion rubles, and in the fourth quarter alone it amounted to 121 billion rubles.

Managers managed to attract a larger volume of funds to retail funds only twice in the entire history of the industry in the Russian Federation – in 2020 and 2021 (207 billion rubles and 323 billion rubles, respectively). But if in those years the bulk of the money came from bond funds or stock funds, then in 2023 they were among the outsiders. At the end of the year, the net outflow from bond funds amounted to 17.4 billion rubles, while only 1.6 billion rubles went to equity funds.

The main beneficiaries of the attractions were money market funds, the net attractions to which amounted to almost 185 billion rubles. Investors invested more than 20 billion rubles in mixed-type funds over the year. Another about 3.6 billion rubles. went to precious metals funds.

The reasons for the high popularity of money market funds are the lack of growth in the stock market and increased volatility of bonds, as well as high rates in the money market itself. In December, the Moscow Exchange index fell by 2% and settled just below the level of 3,100 points. “In the context of rising rates (the Central Bank in December raised the key rate by another 100 bp, to 16%), such an instrument looks attractive, since it does not carry interest rate risk (the value of the unit does not decrease due to rising interest rates) and gives an opportunity to wait out the current turbulence,” notes the head of the asset management department of Alfa Capital Management Company Viktor Bark.

Money market funds are considered as an alternative to savings accounts, but they are more liquid, since shares can be sold without losing accumulated income on any trading day on the Moscow Exchange. It is for this reason that money market mutual funds are in great demand. According to the exchange, in December the total trading volume of shares of five such mutual funds amounted to almost 140 billion rubles, which is 30% higher than the November result and almost 17 times higher than the values ​​of the beginning of 2023.

The role of money market exchange-traded funds will remain dominant in the coming months, managers say. This will be facilitated by the Central Bank’s continued tight monetary policy against the backdrop of high inflation. The head of the sales department of Management Company “Pervaya” Andrey Makarov notes: inflation is affected by the risks that the budget deficit will need to be covered either with funds from the National Welfare Fund or borrowing.

At the same time, since money market funds generate less income over the long term than bonds or stocks, if the stock market grows and inflation slows, funds may begin to flow into riskier categories of mutual funds.

“Russian shares have good potential this year, so we expect a revival of interest when inflation stabilizes, followed by monetary policy, and the market will already anticipate a gradual reduction in the rate,” believes Andrei Makarov. However, he expects the Central Bank to soften its policy no earlier than the second or third quarter.

Vitaly Gaidaev