What income did mutual funds bring in the third quarter of 2023?

The third quarter turned out to be successful for most of the mutual investment fund (MIF) categories. The best dynamics were demonstrated by funds focused on shares of commodity companies. The market was supported by rising oil prices and the depreciation of the ruble, which leads to an improvement in the financial performance of export-oriented companies. Portfolio managers expect continued growth of the stock market and do not exclude the return of the Moscow Exchange index to the level of 3,500 points.

Raw Materials Rise

Portfolio managers performed slightly worse in the third quarter than in the second. However, according to Investfunds, over the past three months, out of 141 large retail funds (OPIFs and BPIFs with assets over 500 million rubles), 109 funds brought income to shareholders. At the same time, 54 retail funds had income exceeding 10%, and the top five funds reached 22–26%. The previous quarter, the results were noticeably better: there were no unprofitable funds, while almost every second fund showed double-digit returns, and shares of the ten best mutual funds rose in price by 20–28%.

The best results for the reporting period were demonstrated by industry funds focused on investing in shares of oil and gas and metallurgical companies. According to Investfunds, the value of fund shares increased by 16–25% over the month. This is facilitated by rising prices for raw materials and the weakening of the ruble. During the reporting period, the price of North Sea Brent oil increased by 30%, to $94 per barrel. The price of Russian Urals oil increased by more than 42%, to $72.3 per barrel. During the same time, the dollar exchange rate on the Moscow Exchange increased by 9%, to 98 rubles/$.

The weakness of the ruble against the backdrop of high prices for raw materials, as noted by Andrei Rusetsky, Investment Director of Pervaya Management Company, has a positive effect on the revenue of exporting companies, so their stock prices grew actively in the third quarter.

Due to the high share of commodity companies in broad market funds, the rise in quotations had a positive impact on their results. According to Investfunds, the value of shares of such funds increased by 10–13% during the reporting period. The record holders of the last quarter – equity funds of foreign companies – lagged noticeably behind them. Even taking into account currency revaluation, such investments brought a return of no more than 10%. The lag is due to the negative dynamics observed on world markets in recent months amid the risks of a further Fed rate increase. At the end of the third quarter, the S&P 500 index fell by 3.7%.

Currency protection

At the same time, currency revaluation had a positive impact on bond funds with foreign currency assets – Eurobonds, replacement bonds and yuan bonds. Shares of such funds added 5.5–12%. Moreover, the growth leaders were mutual funds focused on yuan bonds or with a high share of such securities.

The foreign currency bond market, according to Maxim Vasiliev, chief analyst of TRINFICO Management Company, was supported by the redemption of the sovereign issue of Eurobonds RUS-23, part of the funds from which could be reinvested in available foreign exchange instruments. “Given the relatively low market capacity in terms of the ability to provide a sufficient supply of securities, the influx of additional liquidity played an important role in the rise in prices,” he believes.

The outsiders of the reporting period were ruble bond funds, the bulk of which turned out to be unprofitable.

At the end of the quarter, shares of such funds lost up to 5% in price. During the reporting period, the RGBITR government bond index fell by 5%, and the RUCBITR corporate bond index by 2.8%. This was a reaction to the sharp tightening of the monetary policy of the Bank of Russia. In the third quarter, the regulator increased the key rate three times by a total of 5.5 percentage points, to 13%.

Stock constants

Portfolio managers expect the stock market to continue to rise in the coming months. Managing Director for Investments of Management Company PSB Nikolai Ryaskov does not exclude the possibility that the Moscow Exchange index could rise to 3,500 points due to increased dividend payments, high oil prices and excess money supply.

Against the backdrop of the Central Bank’s plans to further increase the rate and keep it at an elevated level next year, ruble bond funds will remain under pressure. Sovcombank analysts do not rule out that at the next meeting in October the regulator will raise the key rate by another 1 percentage point, to 14%. Therefore, money market funds that make money on short-term transactions will be more interesting for investment.

High interest will also remain in mutual funds of foreign currency bonds, the results of which will depend both on changes in the ruble exchange rate and on the placement of new issues of replacement bonds. Maxim Vasiliev does not exclude that by the end of the year such funds, even without taking into account currency revaluation, could bring about 3% profitability.

Vitaly Gaidaev