The most profitable mutual funds in January 2024

2024 has started well for the collective investment market. Most large retail funds have been profitable, according to InvestFunds. The growth leaders were funds investing in shares of companies in the electricity sector and consumer market, as well as Eurobond funds. Portfolio managers expect further growth of the Russian stock market against the background of the redomiciliation of companies and the payment of high dividends.

Charging the briefcase

According to InvestFunds, at the end of January, of the 127 largest retail funds (open-ended and exchange-traded mutual funds whose net asset value exceeds RUB 500 million), only 19 had a decrease in the value of their units. At the same time, in 28 retail mutual funds the value of units increased by more than 5%, and in the top two – by more than 10%. A year ago, the results were slightly better: only five funds were unprofitable, and six funds showed a double-digit increase in the value of the unit.

The best returns since the beginning of the year were provided by industry funds focused on companies in the electric power industry and the consumer market. According to InvestFunds, the value of shares of such funds increased by 7–10.5% over the month. Shares of broad stock market funds have risen in price by 4–7% since the beginning of the year, while the best dynamics were shown by mutual funds with shares of small and mid-cap companies, which are traditionally more dynamic.

Electric utility stocks have outperformed the market this year, catching up to the market after a correction in the fourth quarter of 2023. Last quarter, the Moscow Exchange Electric Power Industry index fell by almost 11%, while the main index lost only 1%. According to Andrey Alekseev, portfolio manager of Pervaya Management Company, at the end of last year the sector was under strong pressure amid rising interest rates. In December last year, the Bank of Russia increased the key rate to 16% – the maximum since March 2022. This year, according to analysts, the regulator will begin to reduce the rate; the first reduction may occur as early as the second quarter.

Consumer sector funds on the market invest in shares of companies focused primarily on domestic demand.

In particular, their portfolios include shares and depositary receipts of Sberbank, Yandex, Ozon, Magnit, X5 Retail Group, HeadHunter. “Against the background of a relatively strong ruble, such securities have shown better dynamics since the beginning of the year compared to shares of exporters,” notes Andrey Alekseev.

Bond revaluation

Eurobond funds were also among the growth leaders in January. According to InvestFunds, shares of such funds rose in price over the month by 1.8–7.7%. “The main factor in the increase in the value of the share was the process of substitution of Eurobonds, during which securities moved to the domestic market significantly increased in price,” notes Andrey Zolotov, bond manager at RSHB Asset Management.

At the same time, the best dynamics were shown by dollar-denominated securities of STLC, as well as the subordinated issue of HKF Bank.

“The latter made the largest contribution to the yield of the open-end mutual fund RSHB – Currency Bonds for January, since in the external contour its price did not exceed 10% of the par value, and after replacement the securities are traded in the range of 89–91% of the par value,” notes Mr. Zolotov.

Reliance on domestic demand

Managers believe that consumer market funds and Eurobonds still have growth potential. At the same time, they do not expect outpacing growth from electricity funds. “Dividend yield of shares from other segments (other than the electric power industry.— “Kommersant”) looks more attractive, big business growth is also not expected,” explains Andrey Alekseev. One of the factors for the growth of mutual fund units in the consumer market will be the redomiciliation of companies in the sector, mainly from the IT sector, whose shares are included in such portfolios.

“Moving to a friendly jurisdiction simplifies corporate governance, allows us to return to dividend payments, and removes many risks for shareholders, which should help reveal the value of such companies on the market,” says Mr. Alekseev.

Eurobond funds also retain growth potential, since the process of replacing Eurobonds will continue until the middle of the year. In addition to this, currency risks remain, namely the weakening of the ruble. This will contribute to stable demand for foreign exchange instruments, Andrey Zolotov believes. Ruble bond funds may also be interesting if the Bank of Russia starts easing monetary policy. “When interest rates decline, which can happen in the next 6-12 months, prices for debt securities with a fixed coupon, while maintaining credit risk, increase, which brings additional income to investors,” notes Mr. Zolotov.

Vitaly Gaidaev