Mutual funds recorded an impressive increase of 44.04%, translating into 4.83 billion euros in 2023, with investors rushing to take advantage of the current high interest rates.
According to the data of the Hellenic Fund and Asset Management Association, the total assets of the 13 mutual fund companies amounted to 15.795 billion euros on December 29, 2023, which was the last session of the past year compared to 10.965 billion euros which were the total assets at the beginning of 2023.
It is worth noting that the amount of 15.795 billion euros was last recorded in the mutual fund market 16 years ago, in December 2007.
In most categories of mutual funds we had positive returns in 2023 for investors of all categories (Equity, Mixed and Bond, Domestic and Foreign), while new money inflows into the sector were also observed. Thus, we saw higher interest in Greek stocks as of last May as well as fixed-term bond A/Cs launched by six banks (the four systemic ones and Optima in collaboration with their subsidiaries mutual fund companies and Attica Bank in collaboration with 3K Investments Partners).
According to data from the Hellenic Fund and Asset Management Association, net inflows into the products of this category had exceeded 3 billion euros until December 27, 2023, recording an outstanding performance. In a four-year period, i.e. in the period 2019 – 2023, the corresponding placements did not exceed a total of 600 million euros.
A pole of attraction for investors
The main reason for investments in mutual funds, and specifically in bonds, is the high interest they offer.
After the outbreak of the inflationary crisis that followed the pandemic, central banks around the world proceeded to tighten their monetary policy. The rise in interest rates has led to higher borrowing costs for governments and businesses, making bonds particularly attractive.
Therefore, they constitute a pole of attraction for investors, who have so far been rewarded for their choice. And this is because they gained on the one hand from the interest collected on their behalf by the mutual fund managers and on the other from the rise in bond prices over the last months of 2023, which especially in domestic securities accelerated due to the country’s return to investment grade.
In 2023, international mutual funds in this category achieved returns of up to 15%, while the majority of them recorded gains of more than 4%. The performance of mutual funds that invest most of their assets in Greek bonds is even better.
Rally to continue in 2024
The price rally will apparently continue in the coming months. As managers pointed out, when central banks start lowering interest rates, their yields will fall further and their prices will strengthen. This is the big bet of those placed in mutual funds of the category.
Especially in the case of Greek bonds, they are expected to rise further after the country’s return to investment grade, which will lead to inflows of fresh capital in the coming months.
