May turned out to be a good month for large retail mutual funds

May proved to be another successful month for most retail funds. The most profitable were mutual funds focused on investments in securities of high-tech companies, both foreign and Russian. The value of their shares increased by 5-13%. Funds with a high proportion of securities of oil companies also provided significant income. Due to the decline in world prices for gold, funds focused on investing in the precious metal were lagging behind.

IT strengthen positions

According to Kommersant’s estimates based on Investfunds data, in May, the value of shares decreased only in 16 out of 124 large retail funds (open-ended and exchange-traded funds with a net asset value of more than 500 million rubles). At the same time, 24 funds provided income above 5%, while the top two had incomes of 12.6% and 13.2%. Recall that in April, every second fund brought in more than 5% income, and the top 20 had a share price increase of more than 10%.

For the fourth month in a row, funds focused on high-tech stocks remain among the growth leaders.

According to Investfunds, the value of shares of such mutual funds increased by 6-13.2% against the background of the sector’s recovery both in the US and in Russia. Last month, the S&P 500 Information Technology Index rose more than 9%, while the Russian Information Technology Index of the Moscow Exchange added more than 10%.

“The growth leaders were securities of foreign issuers with main activities in Russia, such as Yandex, TCS Holding, Ozon, etc.,” says Vitaly Gromadin, asset manager at BCS Mir Investments. According to him, they were actively disposed of last year, and now they are growing “on expectations of normalization – redomiciliation, restructuring of assets, which will reduce the risk for their holders on the Moscow Exchange.”

Stocks and bonds plus

Funds of the broad Russian stock market continue to show good results as well. Shares of such mutual funds grew by 5–8% in May, overtaking the Moscow Exchange stock index, which added only 3% at the end of the month (fixing itself above the level of 2700 points for the first time since April 2020). Funds with a high proportion of shares managed to overtake the market in the first place Rosneft and LUKOIL, which by the end of the month added 14% and 19%, respectively. This was facilitated by the good financial performance of the companies, as well as their plans pay dividends.

More conservative bond funds continue to perform well.

In particular, Eurobond funds brought shareholders a profit of 1.4-2.6%. Among mutual funds of ruble bonds, the best results were shown by funds of corporate debt securities, whose shares rose in price by 0.7–1.8%. At the same time, shares of funds with a dominant share of government bonds grew by 0.3-0.7%.

“In Eurobonds, the dynamics of quotations is influenced by placements of replacement papers, corporate bonds won back in May the backlog from OFZ, which was observed in April,” Vitaly Gromadin explained.

Recent leaders have become outsiders – funds investing in gold. Such investments depreciated by 0.4–3.8% over the month, which is associated with a decrease in the cost of the precious metal. Gold fell 1.4% last month to $1,962 a troy ounce, according to Investing. This happened against the backdrop of statements by Fed officials who, despite the problems of American banks, are not ready to give up a tight monetary policy in the fight against inflation.

Dividend rate

Managers are counting on the continuation of the rise in the Russian stock market. “The main driver for the growth of the stock market in the summer will be the reinvestment of the dividends received, which in the summer will go to the accounts of investors from LUKOIL, Tatneft, Rosneft, the Moscow Exchange, MTS and Polyus,” says Sofia Kirsanova, portfolio manager at Pervaya Management Company. In addition, she expects the resumption of the publication of full financial statements by companies that have “gone into the shadows”, taking advantage of the CBR’s easing.

“Many of the reports could be a pleasant surprise in terms of results, as well as harbingers of dividends from issuers that have suspended payments in 2022,” said Sofia Kirsanova.

In the case of bond funds, according to the chief analyst of TRINFICO Management Company Maxim Vasiliev, one of the most important factors will be the possible tightening of the monetary policy of the Central Bank. “In the coming months, there is a possibility that the regulator will decide to raise the rate, which will certainly be reflected in the debt market,” he notes. In the summer months, the role of geopolitics, which has temporarily faded into the background, may also grow.

Vitaly Gaidaev