2017-08-24
Investment fund market redistribution: Investors choose greater diversity and lower taxes
The first half-year of 2017 was a success for equity investment funds which operate and are distributed in Lithuania. Investors direct more funds to foreign funds, distributed in the country; specialised funds, intended for professional investors, which mainly invest in real estate, have been posting growth as well.
‘Investment in foreign funds distributed in the country has been growing for the third consecutive year, the main reason for that being more options for funds, a greater diversity of investment strategies, and lower management fees,’ says Audrius Šilgalis, Principal Specialist of the Investment Services Supervision Division at the Bank of Lithuania.
At the end of June, 51.4 thousand investors had invested EUR 411.07 million in funds of this type – nearly EUR 8 thousand on average per participant. The number of investors increased by 5 per cent, asset value – by 4.6 per cent over the half-year.
The unit value of investment funds intended for retail investors rose by an average 4.8 per cent in the first half-year of 2017. The most successful were equity investment funds, with their unit value having grown by 7 per cent.
The market of collective investment undertakings intended for informed investors continues to grow. Funds of this type, which were first established just a few years ago, currently manage assets worth EUR 400 million. These funds mostly invest in real estate and undertakings managing and developing this type of assets. Since the end of 2014 collective investment undertakings intended for informed investors have increased by four times in number and currently there are 50 of them, while the assets managed by them have grown by even eight times.
At the end of the first half-year of 2017, 1.27 million participants of the 20 2nd pillar pension funds (PF) operating in the country had accumulated EUR 2.68 billion. Fund assets grew by 7.6 per cent, the number of participants – by 1.5 per cent. As of 2017, there are no deductions from contributions; as a result, EUR 82.6 thousand more were transferred to pension fund participants’ accounts over the first half-year, which also contributed to the funds’ performance. Since the beginning of the year the value of the net assets of 2nd pillar pension funds has risen by EUR 188.56 million. Over the first half-year, Sodra transferred to pension funds EUR 83.32 million, participants who chose to pay additionally – EUR 40.85 million, while the State transferred to them additionally EUR 41.02 million. A conclusion can be derived that, owing to their successful investing activities, pension funds earned EUR 22.37 million to their participants (excluding the funds paid out to participants who have finished participation in pension funds).
3rd pillar supplementary accumulation of pensions PFs recorded fast growth in assets and membership. Their assets grew by 7.84 per cent over the half-year, to EUR 85.73 million at the end of June. At the end of the period, almost 55 thousand participants accumulated their pensions in the 12 3rd pillar pension funds, an increase of 6.4 per cent since the beginning of the year.