ZB Invest Must Reduce Exposure of ZB Trend Assets to Pioneer Funds

The Croatian Financial Services Supervisory Agency (Hanfa) has instructed the asset management company of Zagrebačka banka, ZB Invest, to reduce the exposure of the open-end investment fund ZB Trend to individual investment funds, in this case, the American Pioneer funds, within 60 days.

Additionally, it is stated in Hanfa’s decision that ZB Invest must change the Prospectus and Statute of ZB Trend within the same timeframe and include all information that has been omitted in the current versions, as required by the Investment Funds Act. This information will allow “investors to form a reasoned judgment about the open-end investment fund and make an investment decision, particularly regarding the risks associated with the nature of the fund and its portfolio.” In the supervision of the operations of investment funds managed by ZB Invest, Hanfa determined that the assets of that fund were invested in accordance with the existing Statute, but not in accordance with the provisions of the aforementioned law, which limits investment in shares and stocks of an investment fund to a maximum of 20 percent of the net asset value of the fund.

It was also determined that the Pioneer funds are the investment advisor to ZB Trend and simultaneously a member of the same banking group – UniCredit Italiano, thus they are related legal entities, and the law also restricts asset investment in such cases. ZB Invest responded to Hanfa’s supervisory findings that “from the perspective of the global strategy of exposure to equity markets, it is irrelevant whether investment in stocks is achieved through direct investment – purchasing shares, or indirect investment – purchasing shares of investment funds that invest in stocks” and that “completely restructuring the portfolio from positions in investment fund shares to positions in stocks is not rational.” However, the decision states that these comments from ZB Invest did not affect the circumstances significant for making such a decision.  (H)