Mihail Ion, chairman of Raiffeisen Asset Management (RAM), a mutual fund manager, believes the stock market is likely to offer smaller profits compared to the bond market this year.
"This year, the stock market may perform worse than the bond market. In Romania, investment funds are more dependent on the stock market than in other regions, as we do not have a sufficiently strong segment of funds that should not be correlated with the trend of stock," said Ion in an interview with ZF.
However, investors' orientation toward the bond market, and implicitly toward funds with placements on this market, does not offer a viable alternative for placements, either, on a falling stock market.
"The bond market does not offer very broad investment possibilities. To be more precise, apart from a low number of government securities, there are few corporate bonds, with a low liquidity level (...)," stated Mihail Ion, who added that bond funds are preferred more by institutional investors.
Funds with investments on the bond market have boasted the highest yields in the industry in the past 12 months, after Stabilo, managed by Pioneer Asset Management, ended April with an annual plus of over 10%.
As regards equity funds, they have reported negative yields over the past 12 months, which reached up to minus 29% in late April.
The dramatic decline experienced by the domestic Stock Exchange indicates that the riskiest funds have posted the biggest slumps. "When making an investment, an investor should not look only at a fund's yield, but also at its risk. Besides risk and yield, liquidity is the third criterion when selecting a fund," specified Ion.
Raiffeisen Asset Management currently has net assets worth above 111m RON (31m euros) under management, and owns 4 mutual funds in its portfolio. The company ranks third in mutual fund managers' top in terms of the value of net assets.
"The market is still small and it's easy to hold a top position. Due to the current size of the market, gaining a certain position is not very difficult because one does not need very large volumes," says Ion.
Moreover, banks' supremacy on the mutual fund market cannot be viewed only as a "battle for market share," as managers are interested in market growth, and less in outrunning a rival.
Whereas in 2007 the mutual fund industry reported an over 50% increase in net assets, for the current year it is hard to assess whether the rate will be faster. For the coming years, however, the RAM chairman is more upbeat.
"I wouldn't be surprised if the industry advanced by 100% or even 200% in the following years," he said.
Moreover, recent slumps on the stock market will encourage fund managers to diversify their placements by looking towards foreign markets, as well.
