Expert RA

The trust management market in the first quarter of 2008 has remained almost the same

May 19th, 2008

Expert RA has prepared a study of the trust asset management and collective investment market in the first quarter of 2008 “Chasing any ruble”, which laid a foundation for ranking asset management companies in relation to management and main lines of business.

According to Expert RA analysts, the trust management market in the first quarter of 2008 practically remained the same. By the end of 2007 the trust management market capacity was assessed to be 1.8 trln rubles, by the end of the first quarter of 2008 – maximum 1.9 trln rubles. Thus, a quarter made the market increase by only 5.5%. The market situation is caused by small inflow of new assets, toneless behavior of fund indexes, causing losses, and a problem related to the new funds’ registration, which cooled down the closed funds’ segment having previously been a consistent market driver.

The quarter was not too good for closed mutual funds, too. Net asset value increment of the fund group constituted only 12%, which is very little comparing to last year leaps of 20% or even 30% with average quarter increase by 15%. Within the three months of the current year a number of closed mutual funds reached 466 – 80% in the segment asset structure. But the segment is still expected to keep on growing quickly. Federal Service for Financial Markets builds up normative and regulatory base, therefore perspectives related to qualified investors’ funds, still remain bright. The construction market – a key market for closed mutual funds – is also on a developing side, supporting asset management branch.

The collective investments’ retail segment finished the quarter with losses. Net asset value of open funds went down by 8% to 124 bln rubles, interval funds – by 12% to 39 bln rubles. The reason for this is January fall of the stock market by 16% (rubles), and preservation of “saw” dynamics of indexes during the three months.

Expert RA analysts forecast the beginning of the important stage in the trust management market development in the near future – asset management companies would be attracted to placement of temporarily free funds of state corporations. Presently the state corporative budgets are comparable to the scope of the whole market - therefore even relatively small influx of the temporary free funds would strongly impact development of asset management companies and the whole financial market. The state corporate funds are sufficient enough to support the stock market and the banking system liquidity, to accelerate development of more complicated financial instruments. More complicated instruments will enable managers to use hedge strategies to protect deposits of regular investors, and the state funds.

92 management companies were involved in the study, with their financial market share being 75%. Total cost of assets managed by trust companies, included in the Expert RA quarterly review, was a bit over 1.4 trln rubles.