Domestic equity investment funds have more confidence in Apple and Microsoft when it comes to American stocks than, for example, in the global equity hit Nvidia. Regarding funds focused on the regional market, the most represented among Croatian issues are the shares of Končar and Podravka, while among companies from the broader environment, our fund managers often choose those from Poland and Turkey.
As stock markets in developed countries reach record high levels, especially Wall Street, and recently the domestic CROBEX is also on the rise, investing in investment funds is becoming relatively popular again.
A turnaround compared to 2022.
Statistics from the Croatian Financial Services Supervisory Agency show that last year, a net amount of 49 million euros was invested in equity investment funds. This is quite a turnaround considering that the previous year recorded a net outflow of 17.8 million euros. However, it should be emphasized that 2022 was specific in this regard due to the significant capital flight from riskier investments due to Russia’s attack on neighboring Ukraine. In February of that year alone, the net outflow from equity funds amounted to 13.6 million euros.
In terms of net asset size of 377.4 million euros, equity funds rank third on the list, after those classified in the ‘Other’ category (657 million euros) and the long-popular bond funds, which hold 931.6 million euros. Generally speaking, it can be said that interest among domestic investors in riskier types of funds, equity and mixed, has increased, says Iztok Likar, director of the Hrportfolio portal.
– Everything that carries a return is popular among investors, and for investors in such funds to feel secure, they must be convinced that the market trend is positive – emphasizes Likar.
Regarding investor confidence, in his opinion, the positive trend on the Zagreb Stock Exchange influences this more than, for example, on Wall Street.
– There is a noticeable slight decrease in payments into funds as soon as a negative series of several days occurs on the domestic stock exchange – emphasizes Likar.
Along with index UCITS funds and also index exchange-traded funds (ETF), Hanfa’s statistics record 14 actively managed equity investment funds. Of these, four funds according to the mentioned investment strategy are primarily focused on American stocks.
These are USA Blue Chip managed by Global Invest, then two ICAM (InterCapital Asset Management) funds, Global Equity and Global Technology, and ZB trend. The global dominance of American technology companies is also visible in the portfolios of this quartet. Although only IC Global Technology is primarily focused on the technology sector, American tech giants dominate among the top 10 positions in the other three funds as well.
USA Blue Chip has invested the most in Apple and Alphabet, both at 7.8 percent, while in IC Global Equity, the two largest positions are occupied by Microsoft and Apple. The ICAM technology fund has invested the most individually in Meta and Microsoft. The fund managed by ZB Invest has Vanguard’s ETF tracking the American S&P 500 index in the first position, and among individual positions, Microsoft and Apple are the most represented.
Interestingly, the Nvidia stock, which is solely responsible for a third of the S&P 500’s growth this year, is held by only two funds among the ten largest positions – USA Blue Chip (4.5 percent share in the portfolio) and IC Global Technology (3.6 percent share).
‘Turks’ in demand
In the group focused on Croatian (or regional) stocks, there are six funds – Erste Adriatic, Eurizon HR Equity, HPB Dionički, IC SEE Equity, OTP Meridian 20, and ZB CEE Equity. However, it should be noted that HPB Dionički has a rather heterogeneous portfolio consisting of shares of Končar, but also American Visa and Deutsche Telekom. A similar mix is found in Global Invest’s Capital Breeder, where alongside shares of Nova Ljubljanska banka (NLB) and Luka Ploče, there are also securities of Stellantis (owner of Peugeot and Citroën) and pharmaceutical company Pfizer.
In Erste Adriatica, the most represented are Slovenian stocks, Krka and Nova Ljubljanska banka, followed by Croatian representatives, Podravka and the preferred share of Adrisa, each with a six percent share. Krka, Podravka, and Končar are the most represented in the portfolio of Eurizon HR Equity. IC SEE Equity has invested the most in NLB and the Austrian oil company OMV, and among Croatian stocks, it has the preferred Adris and Končar. OTP Meridian 20 has invested the most in Končar, Zagrebačka banka, Podravka, and Hrvatski Telekom. ZB CEE Equity has the regular share of Adrisa, Končar, Atlantic, and Valamar among domestic stocks. However, the first position of that fund is held by the Polish bank PKO.
Along with PKO, shares of the Polish oil company PKN and the mining giant KGHM – one of the larger global producers of copper and silver – have also been included in the portfolio of IC Nova Europa. The largest position of that fund is the Austrian Erste bank, and there are also four Turkish stocks – Haci Ömer Sabanci Holding (a conglomerate engaged in electricity production, cement, trade, and financial services), Akbank (one of the largest banks in Turkey), Tüpraş (operator of four oil refineries), and Koç Holding (the largest industrial company in Turkey).
Exposure to the Turkish stock market is not without basis – due to high inflation in that country, the prices of local stocks are rising sharply. In the past year, the Istanbul Stock Exchange index BIST 100 has jumped by 72 percent, and just this year by almost 23 percent.
Two lonely riders
Finally, there is only one fund focused exclusively on European and Asian stocks. ZB euroaktiv is most exposed to the French company Louis Vuitton Moët Hennessy, a global giant in the luxury goods segment. In that stock, 6.7 percent of the portfolio is invested, while a slightly smaller 6.3 percent is invested in the company ASML. It should be noted that this is a Dutch manufacturer of machines for producing computer processors, on which, according to media reports, a good part of the manufacturers of these computer parts depend.
One such company is Taiwanese TSMC, the largest chip manufacturer in the world, whose stock is the largest position in the portfolio of the ZB Asia fund. The technological tone of the portfolio could not be avoided by this fund either, as the second largest position is South Korean Samsung Electronics.
