BCR Monetar, with 1.501 billion lei in assets and Raiffeisen RonPlus, with RON1.435 billion in assets, became superfunds by doubling their assets from one year to the next. In 2009 and 2010 the two money market funds attracted RON2.3 billion in total net inflows from 90,000 investors who come from the depositor base of BCR and Raiffeisen Bank, which manage them. The money market funds invest clients’ money in deposits and government bonds.
But this year the situation changed visibly because BCR Monetar fund attracted net inflows of just RON60 million, with assets stagnating around RON1.5 billion for the last few months, while Raiffeisen RonPlus attracted RON200 million from investors. On the other hand, the same banks, both Austrian-held, have to rely increasingly more on internal resources for financing, and will most likely prefer to attract clients for deposits than turn existing clients towards mutual funds.
The change of trend is all the more important since BCR Monetar and Raiffeisen RonPlus have been the drivers of the mutual fund market, managing to turn into an advantage the unfavorable crisis context of the last three years. Moreover, managers express their reservations as to the potential of the funds to exceed the RON2 billion mark in terms of assets. The RON1.5 billion could be the maximum threshold that a mutual fund can reach in Romania under the current circumstances,” says Nicolae Albu, investment manager of Erste Asset Management, which manages BCR Monetar fund.
If you compare money market funds with bank deposits, the former have the advantage that investors can withdraw their money at any time, without losing their profit and, thanks to the large size of assets, funds can negotiate higher interests on deposits with the banks than an individual client can. However, in 2011 the size of their assets no longer helped the funds get high interest rates. The yields of the two funds are around 6.5% in 2011, while banks pay interests on deposits that can exceed 7% a year.
“The reduction of the growth rate was significantly affected by the decline in interest rates at the beginning of the year, while in the second half uncertainties over the euro zone situation limited the amounts attracted,” Albu explained.