What results did mutual funds show in the fall of 2023?

The results of the autumn months turned out to be traditionally weak for the collective investment market. Few Russian stock funds fared better than the market, primarily with shares of oil and gas companies. In addition, against the backdrop of tightening the monetary policy of the Central Bank, money market funds also showed stable growth. At the same time, the strengthening of the ruble led to the depreciation of most of the foreign exchange funds focused on foreign securities, gold, and Russian foreign currency bonds.

Cool off-season

Autumn in 2023 once again confirmed the status of not the best period of the year for the collective investment market. According to Investfunds data, at the end of three months, less than half of all large retail funds (open mutual funds and BPIFs with assets over 500 million rubles) showed an increase in the value of their shares. However, in the summer months, only every tenth fund was unprofitable. In addition to this, over the past three months, only four funds brought shareholders an income above 5% and there was not a single one with a double-digit result. This result is even worse than last year, when the stock market was stormy against the backdrop of partial mobilization. But even against this background, six funds showed an increase in the value of their shares of more than 5%, and for two mutual funds the result was double-digit.

The weak result of the off-season is associated with the end of the growth of the Russian stock market, which lasted since the end of last year.

In fact, in the fall, the Moscow Exchange index remained in a narrow range of values ​​- 3000–3250 points, without a stable trend. Moreover, in the previous eight months the index grew almost 1.5 times, and over the summer alone it added about 20%. This could be due to the departure of the main drivers – the rising US currency and rising oil prices. During the reporting period, the price of North Sea Brent oil decreased by 7%, to $80.7 per barrel. The price of Russian Urals oil fell by more than 8%, to $68.35 per barrel. The dollar exchange rate after several attempts to gain a foothold above the level of 100 rubles. was dropped to the level of 90 rubles.

Conservative and risky

The best results for the reporting period were demonstrated by a few industry funds focused on investing in shares of oil and gas companies, as well as broad market funds where these companies held a dominant share. According to Investfunds, the value of shares of such funds has increased by 2–9% over three months. “Oil and gas companies still remain the main “dividend stories” of the Russian market, thanks to which, even in moments of local corrections, shares of such companies find the greatest interest among investors who want to both maintain exposure in the sector and increase their position in moments of market decline,” notes Chief analyst of TRINFICO Management Maxim Vasiliev. An additional factor in the growth of companies was the return of damper payments.

The most conservative instruments—money market funds—brought stable income to investors.

Over the past three months, the value of shares of such funds has increased by 3–3.2%. This is 1 percentage point higher than the summer period. The bulk of the assets of such mutual funds are invested in short-term money market instruments, primarily reverse repo transactions with a central counterparty, secured by clearing participation certificates. The indicator for the profitability of such funds is the RUONIA rate. At the beginning of September it was 11.84% per annum, and at the end of November it reached 14.9% per annum. This happened against the backdrop of an increase in the key rate, which was raised to 15% at the October meeting of the Board of Directors of the Central Bank.

The currency failed

The outsiders among Russian stock funds were mutual funds of electric power and metallurgy companies. At the end of the reporting period, shares of such funds lost 5–16% in price. However, since the beginning of the year, the funds are still showing good results (growth by 20–37%).

The few foreign equity funds that remained available to private investors after hits in the SDN list of the St. Petersburg Exchange.

According to Investfunds, the value of shares of such funds decreased by 6–9%. This was largely caused by the fall in the dollar in Russia. Currency revaluation led to a decrease in the value of mutual funds focused on investments in gold (decrease by 2.8–6%), as well as some mutual funds with foreign currency bonds (decrease by 1–5%).

Key vector

In the context of the Central Bank’s strict monetary policy, money market funds remain attractive for investment. Sovcombank analysts do not rule out raising the key rate by 1 percentage point, to 16%, at the Bank of Russia meeting on December 15. In general, such a decision, according to Viktor Bark, director of the asset management department of Alfa Capital Management Company, will not have a strong impact on the market. “Prices for short-term securities may decline, but this is unlikely to affect longer-term securities, especially long-term OFZs,” he notes.

If the Central Bank’s rhetoric softens and the key rate is lowered, the yield on money market funds will decrease, and classic bonds with a fixed coupon will increase in price. The beginning of the rate cut cycle, according to managers, will be a good reason to enter bond funds, which will benefit from the growth of debt securities.

Vitaly Gaidaev