Which mutual funds generated revenue in May 2024

Which mutual funds generated revenue in May 2024

The past month has disappointed private investors in the collective investment market. In May, almost all large retail funds turned out to be unprofitable for their shareholders. The worst dynamics were demonstrated by the funds of commodity companies, which suffered due to lower prices for raw materials and upcoming changes in taxation. A tiny percentage of money market and bond funds have made money. Managers do not expect a rapid recovery of the broad Russian stock market, although they expect an upturn in certain sectors.

Which mutual funds generated revenue in May 2024

It's a complete disappointment

The last month of spring brought disappointment to investors who invested in equity funds. The reason is that at the end of the month, the Moscow Stock Exchange index lost 7.3%, rolling back to 3,217.19 points, the lowest value since February 27. In fact, the result was determined in the third decade, when due to falling oil prices, rising rates on deposits and bonds, as well as the discussed tax reform, the market was covered by the strongest sale of risky assets since the autumn of 2022.

As a result, out of 157 large retail funds (open-ended and exchange-traded mutual funds) with net assets exceeding 500 million rubles, 137 funds were unprofitable, according to Investfunds data.

The worst dynamics were demonstrated by shares of Russian equity funds, which lost 2.7–8% in price, and funds focused on investments in shares of commodity companies and small-cap companies were among the leaders of the decline.

The funds of commodity companies were affected by the fall in commodity prices and the refusal of several companies to pay dividends. In May, the price of Russian Ural oil fell by more than 8%, below the level of $70 per barrel. Market participants were also disappointed by the recommendations of the boards of directors of Gazprom and MMC Norilsk Nickel, which proposed not to pay dividends by the end of 2023, although the market was waiting for a positive decision. The strong ruble was also not on the side of such investments. In May, the dollar exchange rate decreased by 3.2% to 90.1 rubles/$. Konstantin Asaturov, Managing director of the department for work with shares of Sistema Capital Management Company, also names a potential tightening of tax policy among the reasons for the decline, which may primarily hit commodity companies.

In turn, mutual funds of small and medium-sized companies have become victims of lower liquidity and, as a result, greater volatility in stock prices of such companies. According to the results of last month, the index of the Moscow Stock Exchange of medium and small capitalization companies lost almost 15%.

The bet did not come out

Most bond funds also turned out to be unprofitable. According to Investfunds, in a month, the shares of every second fund lost 1-4.8% in value, and the shares of 17 funds sank within 1%. Government bond funds have been showing the worst dynamics for several months now. This happened against the background of an increase in the yield of debt securities and, as a result, a decrease in their value. In May, the RUCBITR corporate bond index of the Moscow Stock Exchange fell by 1.5%, while the RGBITR government bond index lost more than 4%. The "bearish" game in the debt market was caused by harsh statements from representatives of the Central Bank, who began to set up market participants for a possible increase in the key rate.

Private investors have transferred 35 billion rubles to the mutual fund market

In mid-May, market participants began to revise the trajectory of the key rate movement, now laying down a higher probability of its increase at the next meetings. "In the past, we established the long-term rate hold scenario at 16% and evaluated the probability of the rate growth cycle continuing at 5%. now the probability of a key rate increase is close to 30-40%," said Ivan Lavrinenko, Investment Director of Era Investments Management Company. Shareholders, in the face of falling prices on the debt market, according to Viktor Bark, director of the Asset Management department of Alfa-Capital Management Company, also sold bond funds.

Partially, funds withdrawn from bond funds were transferred to bank deposits, as well as to money market funds, which confirmed their protective properties during periods of rising rates.

According to the results of last month, all funds of this type provided an increase in the value of the unit in the amount of 1.2–1.5% and for the first time since the autumn of 2022 topped the rating of the most profitable mutual funds.

The majority of the assets of such funds are invested in short-term money market instruments, primarily in one-day reverse repo transactions with a central counterparty, secured by clearing certificates of participation. The indicator for the profitability of such funds is RUSFAR, which increased by 63 basis points over the month, to 16.21% per annum.

Deposits are out of competition

Although money market funds are a tool for temporary placement of funds, they will have to stay in them for more than one month. The reason is that until the situation with inflation and the monetary policy of the Bank of Russia stabilizes, bonds will remain under pressure, as will the stock market, which has become less attractive due to higher rates on the money and debt markets. According to Anton Kravchenko, head of the stock management department of the First Management Company, in June, the pressure on the stock market may persist. In the following months, the situation may improve, including due to the receipt of a large amount of dividend payments, but it becomes more difficult for them to compete with offers of an annual deposit interest of 18%.

What is attractive about money market mutual funds?

In such difficult conditions, the role of active portfolio management is growing, when managers reduce investments in the least promising securities and increase the share of promising ones. "The growth potential of the stock market is significantly limited due to high rates in the debt market, but at the same time there are issuers such as Yandex, which are not in the index, but they still have high growth potential",— Mr. Kravchenko notes.

According to Ivan Lavrinenko, active investors should have a balanced portfolio, where all available asset classes are represented: Russian stocks, ruble bonds, and the money market. Instruments with a currency component will also be useful for diversification: replacement and yuan bond funds, as well as gold. Moreover, the current strengthening of the ruble is due not so much to fundamental as to technical reasons, namely difficulties with the conduct of operations by importers.