The ranking of the best performing mutual funds in the past three years is led by bond funds, which obtained yields between a maximum of 33.85% for OTP Obligatiuni and a minimum of 17.81% for BRD Obligatiuni. The average yield obtained by the seven bond funds is 22.79% between June 30 2010 and June 30 2013, according to statistics of the Fund Managers Association (AAF).
“The better performance of bond funds is explained through the high risk aversion experienced in the past three years, with investors putting their money massively in investments considered safe, which generated an increase in yields of fixed-income instruments. If over the next three years risk aversion will decline, then we can expect shares to perform better,” says Gabriel Goia, investment manager of BT Asset Management. The company manages bond fund BT Obligatiuni, with a yield of 21.8% in the past three years, balanced fund BT Clasic, which brought a yield of 22.8% and equity fund BT Maxim, which lost 4.4% of investors’ money.
Goia adds that one can expect the Romanian central bank to continue to cut its reference interest rate, which will lower the yields of fixed-income instruments.
Bond funds put investors’ money in government bonds, bonds issued by companies and by city halls, and in bank deposits.
The yields obtained by bond funds are above the inflation rate, of around 16.5% in the past three years. In other words, if you subtract the inflation rate from the yield of the best-performing fund, OTP Obligatiuni, this leaves a real earning of 17.35%.
The average interest rate on bank deposits of the past three years has been 21%.
The performer of the market is OTP Obligatiuni. The fund managed to obtain a yield of 33.85% paradoxically thanks to shares. In the spring of 2011, before the start of aggressive stock exchange declines, the manager of OTP Obligatiuni made the decision to turn balanced fund OTP Balansis into a more conservative bond fund, today OTP Obligatiuni. So the manager managed to keep its higher yields obtained from shares in the past.
On the other hand, the 12 equity funds brought an average negative yield of -1% in the past three years. The category’s performer is BCR Expert, with a yield of 26.34% in the past three years, above that of BET, the main index of the Bucharest Stock Exchange and above that of the BET-FI index, of 22.7% in the past three years. Unlike bourse indexes, yields of equity funds also include dividends collected by them from companies in their portfolio.
The biggest loss was recorded by Omninvest fund, with a loss of 41%. Only two equity funds out of 12 managed to obtain yields above the BET-FI index. And only three funds managed to obtain yields above the main index of the Bucharest bourse – BET. Equity funds put investors’ money in shares of listed companies, which can record declines, so the risk that investors face is high.
Balanced investment funds obtained different yields in the past three years, depending on how much they invested in equity or in bonds.
Funds with low exposure to equity managed to obtain higher yields, such as Carpatica Global Fund, which had a yield of 33.84% and invested in bank deposits, bonds and a low share of assets in shares.
Past yields of mutual funds do not guarantee that future performances will be as high or as low, but they can be used to analyze to what extent it is profitable to diversify savings by investing in a mutual fund.
(English version by Daniela Stoican)