The main line of business of asset management companies is the management of mutual funds, which manage the savings of thousands or tens of thousands of Romanians.
For Romanians with above-average incomes, asset management companies provide customized asset management services, whereby the fortune of one client is managed as if it were a personal mutual fund.
So far, several hundred Romanians chose to let 72 million lei (EUR17 million) worth of assets be managed as individual investment accounts by five asset management companies. Unlike mutual funds, which operate as mass products and investors have to accept the investment strategy no questions asked, individual accounts allow clients to decide together with their personal manager on a yield target, an investment strategy, and to take higher risks.
Some of the clients of individual accounts got a return of up to 200% in the past year by investing in shares of Fondul Proprietatea before it became listed on the Bucharest Stock Exchange. Others invested in the shares of chemical plant Oltchim (OLT.RO), which grew by over 600% in 2011, and in RASDAQ-market listed shares.
“The average yield obtained by an individual account has been 28% for the last year, but we also have clients who took the risk of buying shares in the Fondul Proprietatea and got a return of up to 200%,” said Eugen Voicu, president of management company Certinvest, the largest independent manager of individual accounts. The company manages the RON30 million assets of its clients.
At Erste Asset Management, the company that manages RON3 million worth of accounts, the best-performing individual account got a return of 22% between June 2010 and June 2011, which compares with a 7% target set with the client.
“When they open an individual account, clients prefer a mix of shares and bonds. The reasons for opening such an account mainly have to do with fears of an inflation hike, as well as with unhappiness over lower interest rates,” says Dan Popovici, investment manager at OTP Asset Management, a company that manages accounts of over RON640,000.
(EUR1=RON4.2445)
(English version by Daniela Stoican, editing by Loredana Fratila-Cristescu)