The Russian collective investment market recorded a record influx of funds

The Russian collective investment market recorded a record influx of funds. According to the results of the third quarter, attractions to mutual investment funds amounted to almost 770 billion rubles. Among the leaders in attraction were closed-end mutual funds aimed at wealthy private investors. Such packaging of assets has a number of advantages, including confidentiality and a simplified system of transfer during inheritance. However, for these investments to pay off, the size of such funds must be several hundred million rubles.

Record attractions

In the third quarter of 2023, the inflow of funds into mutual funds increased sharply, it is noted in “Review of key indicators of management companies” Central Bank. At the end of the reporting quarter, investors invested almost 769 billion rubles in these instruments. This is more than three times higher than the result of the second quarter and the best result in the entire history of the industry. The previous record was set in the fourth quarter of 2022, when the inflow amounted to RUB 764 billion.

Last quarter, inflows outweighed sales across all fund categories. Investors invested 3 billion rubles in open mutual funds, 43 billion rubles in exchange-traded funds, and almost 71 billion rubles in interval mutual funds. The main influx, as in the previous year, came from closed funds created for legal entities. Such mutual funds attracted almost 470 billion rubles during the quarter.

Individual demand

For the second quarter in a row, a significant part of the inflow (RUB 115 billion) came from closed-end mutual funds aimed at wealthy investors. Since the beginning of the year, such funds have attracted 321 billion rubles. As the Central Bank notes, such funds have one or two owners – individuals. Sometimes several legal entities are added to the number of investors.

The average value of assets per individual in such funds exceeds 2 billion rubles.

In management companies, such funds are called personal funds. They can be used to pack any assets – securities and shares in companies, movable and immovable property, luxury goods and art, and much more. The exception is cash. “The advantage is not only in creating a fund with different types and classes of assets, but also in bringing beneficiaries closer to the results of investments within the fund without the need to have and create other legal entities, including in offshore jurisdictions,” notes the director of the management department of closed mutual funds “RSHB Asset Management” Boris Golubev.

Packaging with an approach

An additional advantage of such asset packaging is the protective architecture and special tax regime of the fund, notes Vladimir Zelenov, head of the directorate for work with institutional and corporate clients at Alfa Capital Management Company. The first is especially relevant in the context of ever-expanding anti-Russian sanctions, since the transfer of assets to a closed mutual fund removes the final beneficiary from among the owners. In the registers, the management company will be listed as the owner, which will be entrusted with all the functions of a shareholder.

The special tax regime of an investment fund makes it possible to balance tax bases and increase profitability by reinvesting income.

The risks of such a transfer are minimal, market participants note. “The assets of a personal fund are protected – transactions with assets included in the fund are possible only with the consent of a specialized depository, as well as through the investment committee enshrined in the rules of trust management of the fund,” notes the general director of Tethys Capital Management Company Alexander Voronkov. Even in the event of bankruptcy of the management company, the closed mutual fund, as a separate property complex, is simply transferred to another management company.

Transferring assets to a closed mutual fund is convenient in matters of inheritance, since the heirs do not divide various assets among themselves, but receive fund shares in proportion to their share. The assets remain in the fund under the management of the management company chosen by the owner when the fund was formed. Despite the unfavorable set of circumstances, as Alexander Voronkov notes, the management company continues to manage assets and generate income paid to the heirs.

Share for multimillionaires

However, it makes sense to create such a fund with amounts of hundreds of millions of rubles, otherwise the costs of servicing it will eat up the contributed assets. “The entry threshold and the size of the commission depend on many factors, including the type of assets and the goals of the fund. In this case, each management company makes decisions independently,” notes Alexander Voronkov. According to his assessment, the economically feasible threshold for the fund is amounts from 300–500 million rubles. According to Boris Golubev, the fund becomes effective for assets worth more than 700 million rubles, but sometimes funds implement other strategies, for example, implementing partnership investment projects. In such cases, the management company acts as a guarantor of the interests of various investors, for whom the size of the fund becomes not the main criterion.

Vitaly Gaidaev