Equity funds saw 9.2 million RON in net amount withdrawn in October, the largest volume of this year, while withdrawals from balanced funds stood at 14.1 million RON according to the monthly report of the Fund Manager Association. Moreover, the equity funds in the first ten months of the year witnessed net withdrawals of 15.3 million RON, while investors in balanced funds withdrew a net amount of 28.6 million RON.
"It was obvious that significant amounts would be withdrawn from funds exposed to the stock market, considering the performance of the Stock Exchange last month. Investors incurred heavy losses, which is why they took their money out of funds," said Razvan Rusu, investment manager of Aviva Investors management company.
Financial Investment Companies (SIFs), top investment destinations because of their high liquidity for equity and balanced funds fell 56.4% in October alone. The BET index, which includes the ten most liquid companies listed on the Bucharest Stock Exchange, dropped 32.6%, while the BET-C, which reflects the performance of all the listed companies on the Bucharest Stock Exchange, lost 32.9% in October.
Record withdrawals in October took the assets of equity funds back to where they were three years ago, 118 million RON, even though the number of funds today is double the number in 2005. The eight equity funds ended 2005 with net assets worth 72.2 million RON, only to see their assets increase fast to 204 million RON in 2006, and 398 million RON in 2007.
"We can be talking about a new beginning for the equity funds after the unprecedented declines that occurred this year," Aviva Investors' Rusu continued. Besides equity funds, balanced funds went down, too, ending the first ten months of the year with 193 million RON in assets, below the 240 million RON at the end of 2006. At the other end are the monetary and bond funds that saw investors subscribe 12 million RON in net amount. Inflows in monetary and bond funds reached a record 250 million RON this year, according to the Fund Manager Association statistics.
The equity funds lost 2,800 investors in the first ten months of the year, while balanced funds lost 1,600. Most investors sought shelter in banking deposits or funds that invest in fixed-income instruments, so that the number of investors in bond funds went up by 5,000 to almost 14,200, whereas monetary funds ended the first ten months of the year with 1,600 more investors.
"One of the investors that withdrew from the equity fund managed by Aviva Investors said he was leaving because interests offered by banks were very high, of up to 12% a year, while equity funds had witnessed heavy losses. Investors have arguments to exit equity funds today, because interests on deposits are very high but they have to think long-term and equity funds have a long-term growth potential," Rusu went on.
