Food-loving Hungarians put billions into this investment, and they’re not doing badly

RockedBuzz
By RockedBuzz 7 Min Read

As we now have already reported many instances within the columns of Portfolio, within the spring the federal government tightened the foundations for the underlying investments of mutual funds a number of instances with the intention of directing the property managed by the fund managers in the direction of the federal government securities market.

However, what may have had a higher impression on the demand for funding funds is the brand new tax launched with impact from July 1st: with the introduction of the socho, along with the 15% curiosity tax, a further 13% tax can be charged on the earnings achieved on most investments, thus additionally the return earned on funding funds. In the meantime, earnings on authorities securities are nonetheless tax-free. We wrote extra about these processes within the following articles:

However, virtually 5 months after the entry into power of the decree, we will state:

the funding funds thanks, they’re doing properly, the property beneath administration elevated dynamically even after July 1.

In different phrases, the Socho did not deter Hungarians from funding funds both.

How a lot will HUF 1 million change into in 1 12 months?
Gross return5%15%25%
Without tax (HUF)1,050,000 1,150,000 1,250,000
With curiosity tax (HUF) 1,042,500 1,127,500 1,212,500
With curiosity tax and socho (forint)1,036,000 1,108,000 1,180,000
Net yield earlier than the introduction of socho4.25%12.75%21.25%
Net yield after the introduction of socho3.60%10.80%18.00%
The ratio of internet return earlier than and after the socho118.06%118.06%118.06%
The gross return required for a similar internet return is then5.90%17.71%29.51%
Source: Portfolio calculation

New milestone, growing returns

The figures clearly present the impact of the federal government’s measures launched this 12 months: in June, the fund managers have been capable of shut the month with a document gross sales of HUF 645 billion, and though in July market members feared that there could be a decline in internet gross sales as a result of socho, this month the funds closed with a excessive recent capital influx of 290 billion. A excessive capital influx of HUF 341 billion was additionally recorded in August, and the months of September and October have been not dangerous both, with inflows of HUF 268 and 256 billion, respectively.

Although the market slowed down a bit, gross sales did not go badly in November both: the fund managers have been capable of promote a complete of HUF 212 billion in funding certificates.

In distinction to October, the yields have been notably good, so the property managed in funding funds elevated by a complete of HUF 362.5 billion, i.e. by 2.8%.

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And this enhance was sufficient for property beneath administration to exceed HUF 13,000 billion: on the finish of November, it stood at HUF 13,318 billion. There isn’t any stopping the expansion in reputation of funding funds: since March 2022, there has not been a month by which the property managed within the funds decreased.

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There are nonetheless bond funds

November did not carry too many surprises when it comes to the gross sales of particular person fund classes: bond funds carried out one of the best within the eleventh month as properly, closed with HUF 179 billion in gross sales, greater than in October.

Private funds are in second place, far behind, with HUF 24.4 billion, however absolute yield funds additionally made it to the rostrum with HUF 22.1 billion. In November, fund managers skilled a big outflow from blended funds, however cash market, by-product and actual property funds additionally suffered within the penultimate month of the 12 months.

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The above knowledge additionally point out that the hole between bond funds and the next classes has deepened additional: with property of 4,859 billion, not one of the primary classes can compete, the second place, the class of actual property funds, has property of “solely” HUF 2,010 billion.

In third place are blended funds with property of HUF 1,743 billion, adopted by non-public funds with roughly HUF 400 billion. This 12 months, absolutely the yield class was additionally capable of obtain a big growth, they’re already over HUF 1,300 billion.

Dec. 4

In gentle of the above knowledge, it’s not in any respect stunning that bond funds have an enormous benefit in this 12 months’s whole internet gross sales, this class attracted HUF 1,833 billion from traders this 12 months. It signifies that this 12 months alone, extra recent capital arrived in bond funds than between 2019 and 2022 in whole,

furthermore, there’s a likelihood that this 12 months’s gross sales of bond funds will exceed HUF 2,000 billion in December.

Capital-protected funds are in second place right here, however this is generally due not to the recent influx of cash, however to reclassifications on account of one of many authorities’s rules, which we wrote about in additional element right here:

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In phrases of returns, traders have not fared badly in any respect: Between January and October 2023, commodity market funds may reap essentially the most (11.61%). – it’s true that there’s a fund right here, the OTP Föld Kincsei fund, which has achieved distinctive returns, even if it principally (over 80%) retains its cash in financial institution deposits.

Equity funds are in second place with 11.08%, and blended funds are on the backside of the rostrum with a return of 10.35%. The least was earned with capital-protected funds to date this 12 months, however on the identical time, it’s a optimistic pattern that no class achieved a damaging common return on property in 11 months.

Dec. 6

Cover picture supply: Getty Images

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