Scandinavian investors contribute to growth of INVL Asset Management’s biggest mutual fund

Scandinavian investors in recent times have been increasingly helping to boost the assets of the INVL Emerging Europe Bond Subfund, the biggest mutual fund manged by INVL Asset Management.

The fund’s assets exceeded EUR 20 million at the end of February: this year alone EUR 3.3 million have been added and the fund’s assets under management have increased by 20%. During 2015, the INVL Emerging Europe Bond Subfund’s assets under management grew by 29.3% – from EUR 12.9 million to EUR 16.69 million.

One of the main reasons for the fund’s growth is the attraction of investments from abroad. Mutual funds managed by the company attracted a combined EUR 2 million of foreign investments in 2015, with another EUR 900,000 added in the first two months of this year.

“We’ve recently been actively distributing the mutual funds in the Scandinavian countries and in Germany. This is the market that’s been the main sales channel attracting new money. We notice that these countries’ investors appreciate our experience in Central and Eastern European equity and bond markets,” said Tomas Krakauskas, Director of the Investment Management Department at INVL Asset Management.

Scandinavian investors currently comprise 8% of participants in the INVL Emerging Europe Bond Subfund (up from 0.3% a year ago). The number of participants from these countries now exceeds 150 (a year ago there were 7 such investors).

According to Krakauskas, Nordic investors show keen interest in the fund first of all due to the attractive yield it offers relative to the maturity and risk of the bonds in the fund. “Plus, international rating agencies give the fund high scores,” he said.

As of 1 March, the yield to maturity of the INVL Emerging Europe Bond Subfund was 4.6%; the bonds it held had an average effective maturity of 3 years and an overall credit rating of investment grade (BBB-). The international agency Lipper Leaders gives the fund top ratings on its 5-point scale.

Investors in the Scandinavian countries are also investing in other INVL Asset Management funds. They currently even have a 55% share in the INVL Russia ex-government Equity Subfund (up from 46% a year ago). In the INVL Baltic Fund, Scandinavian investments account for more than 20% of assets, while in the INVL Emerging Europe and Russia TOP20 Subfund they make up as much as 10%.

“Scandinavian investors aren’t afraid to assume big risk. Their investments in the INVL Russia ex-government Equity Subfund have paid off, since despite the unrest in Ukraine and the falling price of oil, in 2015 the fund’s value increased 17%. So far this year, too, Russia is showing some of the best results in the emerging markets context,” Krakauskas said.

In order to present its funds to investors in foreign countries, INVL Asset Management takes part in international investment fund events. At the end of January, the company made a presentation in Germany on opportunities to invest in investment funds manged in Lithuania, at the Fonds Professionell Kongress – one of Europe’s biggest investment fund gatherings.

INVL Asset Management manages five mutual funds. Four of them are currently distributed not only in Lithuania, but also in Latvia, Germany, Sweden, Finland, Norway and Denmark. The company has been managing investment funds since 2004 and specializes in picking stocks and bonds in the region of Central and Eastern Europe. At the end of January this year, INVL Asset Management had mutual fund assets under management of more than EUR 33 million, while the number participants in its funds was more than 6,500.

According to Bank of Lithuania data for the end of 2015, every second investor in mutual funds registered in Lithuania held units of funds managed by INVL Asset Management. The company’s market share in terms of number of participants was 47%. INVL Asset Management is part of Invalda INVL, one of the leading asset management groups in the Baltic countries. Companies of the group manage pension and mutual funds, alternative investments, individual portfolios, private equity and other financial instruments.