Analysts, however, say that the winning funds in the long run will be those where managers are actively involved in running them.
Index fund Certinvest BET-FI Index is the top performer of the beginning of this year, with a 22.46% yield from December 31 through February 7, 2012. Second leading fund is another index tracker, BET Index Romania ROTX, with 17.7% yield, while actively managed equity fund KD Maximus came out third, with 16.3%.
An index fund (index tracker) invests in the stocks included in a stock market index and the main job of its manager is to make sure the portfolio matches the index the fund is tracking, unlike the manager of an actively-managed equity fund, which has to pick the companies with the highest growth potential out of the dozens listed on the stock market, watch the fund’s exposure to a specific company and make sure it stays within the bounds imposed by regulations.
Therefore the yield of Certinvest BET-FI and BT Index Romania ROTX were made possible by the trend of the BET-FI index, which comprises the shares of the five regional investment funds (SIF) and of Fondul Proprietatea, and by the trend of the ROTX index of the most liquid companies on the market. KD Maximus’ performance, however, was made possible by the decisions and strategy chosen by the manager.
Despite being the top performers among mutual funds, Certinvest BET-FI and BT Index Romania ROTX did not do as well as the indices they track, mainly because of certain costs a fund incurs.
BET-FI rose by 22.73% from December 31, 2011 and February 7, 2012, ROTX rose 19.34%. The main index of the Bucharest Stock Exchange, BET, went up by 14.37%. There were also stocks on the market to outperform the indices, such as Teraplast (TRP.RO), up 65%, Electroaparataj (ELJ.RO), 40%, Erste Bank (EBS.RO), 37%, SIF Moldova (SIF2.RO), 33% and Fondul Proprietatea (FP.RO), 22%. This year’s increases come after the significant decline by as much as 60% in some cases last year.
Iulian Panait, chairman of investment consultant of KTD Invest, says that if the rising trend continues over the next four or five months, the actively managed equity funds will outperform index funds, because stock selection and not matching a specific index will make the difference.
Jan Pricop, general manager of KD Investments, the manager of KD Maximus, concurs. “The performance of index funds depends on circumstance. It remains to be seen whether this ranking will remain the same over the year. I don’t think the increases we’re seeing on the stock market will last.”
The ranking of the top performing mutual funds is dominated by equity funds at the beginning of 2012, which caused their investors losses in 2011 due to stock market corrections. The top performers of 2011 were the bond funds, whose yield is 1% at best now.
(English version by Loredana Fratila-Cristescu)