November was a record year for collective investments in Russia. The volume of attractions to retail mutual funds reached 42.5 billion rubles, which is 2 billion higher than the previous record from December 2020. Almost all of the funds came from money market exchange-traded funds, which generate small but steady income from short-term repos. In the coming months, according to experts, the attractiveness of such funds will remain, since the Central Bank is not yet going to soften monetary policy.
According to Investfunds, a new record for raising funds in retail mutual funds was set in November. Over the past month, the net inflow into them amounted to 42.6 billion rubles, which is 18% higher than the previous month and 5% higher than the previous record set in December 2020 (40.5 billion rubles). Overall, November was the ninth month in a row when funds showed positive results in terms of fundraising. During this time, they were replenished by almost 150 billion rubles.
However, the investment structure has changed. Three years ago, there were inflows in almost every fund category except money market. Now money market funds have become the main area of investment.
According to Kommersant’s estimates, based on Investfunds data, in November these funds attracted more than 45 billion rubles. A small influx of funds was noted in mixed-type funds (less than 200 million rubles) and funds focused on investments in precious metals (820 million rubles). At the same time, the net outflow from stock funds amounted to 2.5 billion rubles, from bond funds – 1.6 billion rubles.
Interest in money market funds is growing in the absence of a rise in the stock market and on expectations of a further increase in the key rate. In November, the Moscow Exchange index remained in a rather narrow range of values of 3150–3250 points, and at the end of the month it decreased by 1%. In fact, the index has remained close to these values since the end of August. This does not encourage private investors to invest in equity funds.
Bond mutual funds found themselves under pressure from the rapid increase in the key rate. At the very end of October, the regulator raised it by another 2 percentage points, to 15%, and since July the rate has doubled. Moreover, the Bank of Russia does not rule out another increase at the December meeting of the board of directors.
Money market funds exist in the world precisely so that investors can “sit out” turbulent times in the markets of traditional assets in them, notes Oleg Galkin, CEO of Era Investment Management Company. Moreover, the tough policy of the Bank of Russia has a positive effect on the results of these mutual funds, which for the most part make money on short-term reverse repo operations, the rates on which grow following the key rate. At the end of November, shares of such mutual funds grew by 1.12–1.18%, or 13.4–14.2% per annum.
Companies that are associated with large banks with a wide branch network succeed in actively attracting such funds. “We see interest from all categories of clients: these are both mass investors and premium clients,” says Andrey Rusetsky, Investment Director of Pervaya Management Company. There is no fundamental difference between money market funds of different management companies, so the choice by investors of one fund or another is rather a matter of infrastructure and client loyalty, says Viktor Bark, head of the asset management department of Alfa Capital Management Company.
To increase customer loyalty, management companies are ready to improve their characteristics. At MC Pervaya, for example, they increased the daily limit for purchasing fund shares to 5 billion rubles. per day and reduced the commission. “Previously, the maximum investor’s expenses could be up to 0.55%, now – 0.4%,” notes Andrey Rusetsky. Alfa Capital is “studying the issue of changing commissions.”
Due to the ongoing tight monetary policy and high uncertainty, interest in the funds will continue at least until the end of the year. According to Oleg Galkin, the trend with inflows will continue at the end of 2023 and the first quarter of 2024, in particular from investors who need to place available funds for the New Year holidays.
However, as soon as the Central Bank moves to lower rates, investors will switch to bond funds. When the key rate is reduced, bonds traditionally increase in price, notes the CEO of Tinkoff Capital Management Company Ruslan Muchipov, and the longer the duration, the stronger the growth.