Private investors have found an alternative to deposits
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In September, after the Central Bank’s decision to increase the key rate, private investors’ interest in mutual funds increased. Especially for money market funds, which showed increased profitability in the first month of autumn. EV found out what trends are gaining momentum in the collective investment market and what funds can bring profit this fall.
Autumn started positively for the collective investment market. According to Investfunds, last September the total volume of Russian management companies attracted to mutual funds exceeded more than 71 billion rubles. Many citizens were looking for a worthy alternative to bank deposits that could save their savings from rising inflation.
As Alfa Capital analyst Alexander Dzhioev reported, against the backdrop of an increase in the Central Bank’s key rate, the strongest inflows in September were observed in money market funds. Demand from investors, in his opinion, is directly due to rising rates on the market (this allows increasing potential profitability), as well as the market’s expectation that the regulator will continue to tighten monetary policy.
Deputy General Director of Finam Management Management Company Ivan Sokolov suggested that the main flow of funds into money market funds came from stock funds: “The stock market has been growing for a long time, and some investors, in anticipation of a possible correction, decided to take profits and temporarily switch to a more conservative instrument, but having a good current profitability.”
Experts also noted an influx of funds into income-paying funds.
“Against the backdrop of rising rates in the US, investments in gold funds became less popular in September, although they look interesting in the long term. As the Federal Reserve softens policy and taking into account demand from world central banks, gold prices may go up again,” Dzhioev noted.
“September was favorable to Eurobond funds, which showed the maximum increase in the value of units – on average 2-3%, which was partly due to the weakening of the ruble,” said Alexander Lavrov, investment director of East-West Management Company. — Money market funds also showed a slight plus. Stock funds, mixed investments, and bonds showed negative dynamics. If we evaluate the third quarter as a whole, then, of course, equity funds were among the leaders in terms of profitability (+10–30% depending on the fund).
According to Dzhioev, the payment of annual dividends, as well as rising prices for raw materials while the ruble weakened, had a positive impact on the portfolios of equity funds. Against this background, the indicators of exporters increased very noticeably, which could not but affect the influx of funds into the market. Bond funds sank amid falling prices in the debt market.
The influx of funds into mutual funds is associated with the redistribution of money from deposits and the search for alternatives that can save money from inflation, says Alexander Lavrov. According to him, during a period of turbulence, when the key rate of the Central Bank is growing and there are fears of its further growth, money market funds that invest money in reverse repurchase transactions have competitive advantages over other types of funds. These funds react flexibly to changes in the key rate; their profitability increases along with the growth of the key rate.
“In October, the number of private investors in the collective investment market will continue to grow,” Dzhioev is sure. Because, despite the increase in bank deposit rates, returns on the stock market still look attractive. In addition, many shareholders use the funds’ capabilities for tax optimization (tax deductions) and portfolio diversification. For example, using a mutual fund it is very convenient to invest in gold or real estate.
According to Dzhioev’s forecast, by the end of the year, taking into account the payment of interim dividends, the Moscow Exchange index may grow by another 10–15%. He believes that in conditions of high risk of raising the key rate of the Central Bank, money market funds still look interesting. For a longer period, the analyst recommends equity funds and funds whose portfolios concentrate companies in the resource sectors, as they will help protect capital during a period of rising inflation. An alternative is to use real estate funds, which also offer double-digit returns.
“Money market funds look attractive for investment at the moment. But in the future it is worth locking in high rates through bond funds. If private investors have concerns about the decline in the value of the ruble, then they should pay attention to gold funds, since they are tied to the dollar exchange rate, and gold has adjusted to $1,830 per troy ounce,” emphasized Alexander Lavrov.
Evgeniy Mironyuk advises paying attention to mixed funds (stocks + bonds) with income payments (coupons and dividends). Among bond funds, according to his assessment, mutual funds of bonds with variable coupons/replacement bonds are of interest. “For those who are afraid of a strong devaluation of the ruble, funds for foreign assets (mainly ETFs, stocks and bonds) are suitable,” the analyst concluded.
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Private investors have found an alternative to deposits
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