Although the last autumn month pleased private investors in the collective investment market, the income was significantly lower than in the previous month. The best momentum was shown by funds focused on foreign assets, which rose against the backdrop of diminishing fears of a further rate hike by the Fed. Funds focused on precious metals also benefited. The outsiders in November were shares of industrial funds focused on stocks of Russian oil and gas companies and consumer sectors.
Portfolio managers in November performed significantly worse than in October. However, according to the data Investment funds, last month, out of 119 large retail funds (OPIF and BPIF with assets exceeding 500 million rubles), 90 funds brought income to shareholders. At the same time, only 13 retail funds had returns above 5%, while the top two funds returned 11% and 13%. A month earlier, the results were higher: every second fund showed double-digit returns, and the first five mutual funds brought returns at the level of 20-24%.
The best returns were provided by foreign exchange-oriented funds. According to Investfunds, the value of shares of funds investing in shares and ETFs of foreign companies increased by 3-11% over the month.
According to Viktor Bark, director of wealth management at Alfa Capital Management Company, the funds’ results simply reflect the dynamics of the stock markets, which seemed calmer in November. According to Investing. com in November the main European stock indexes rose by 5-8.5%. This was facilitated by inflation data, which turned out to be lower than expected. “Investors have taken this as a signal that the need for tighter monetary policy from the Fed and the ECB is reduced,” explains Viktor Bark.
Among the growth leaders were funds investing in precious metals, which provided shareholders with an income of 4.3-6.5%. The best momentum was demonstrated by mutual funds investing in ETFs (iShares Gold Trust and SPDR Gold Shares). This is due to the fact that in the last month the price of gold has increased by more than 8%, to 1,773 dollars per troy ounce, the highest since the beginning of July.
Investors’ bullish play was also facilitated by lower expectations regarding the pace of the Fed’s rate hike, which affected the decline in US Treasury yields.
Last month, the 10-year US Treasury (UST) yield fell 40 basis points to 3.6% annually. “This trend increases the relative attractiveness of non-current income-bearing assets, including gold,” says Vitaly Isakov, investment director at Otkritie Management Company. In part, the increase in dollar prices of the precious metal was offset by currency revaluation due to the depreciation of the dollar in Russia by 0.8%, to 61 rubles/$.
The raw material did not come out
Funds from the broad-based Russian stock and bond market, which were among the growth leaders a month earlier, showed weak momentum. In November, shares of such funds added up to 1% in price. During the period under review, the Moscow Stock Exchange index increased by only 0.4%, the RGBITR government bond index added 0.9% and the RUCBITR corporate bond index 0.3%. . Better than the market showed the result of funds focused on companies from the energy and metallurgical sectors, shares of which increased in price by 2.7-2.8%.
The outsiders turned out to be sector funds focused on oil and gas and consumer staples companies. Such investments depreciated by 1.2–2%. Oil and gas stocks naturally displayed weak dynamics against the backdrop of falling oil prices. The price of Brent oil has lost more than 5% over the month. “The drop in the oil market was due to fears associated with a slowdown in the global economy amid the tightening of monetary policies by major central banks and the introduction of lockdowns in China due to the worsening epidemiological situation. The decline of the global economy could lead to a decrease in demand for Russian exporters’ products,” said Anton Kravchenko, head of the equity department of Pervaya Management Company.
Bet on growth
In the coming month, according to the portfolio managers, the situation on the Russian market could improve in the event of a Christmas rally in world markets. According to Anton Kravchenko, this could be facilitated by a possible easing of coronavirus restrictions in China, as well as signals from the Fed that the stance on monetary policy will be revised towards less severe tightening. Statistics on inflation and the US labor market can serve as a basis for sweetening the claims. “Before the end of the year, the Moscow Stock Exchange Index may make an attempt to rise towards the target range of 2250-2300 points,” notes Kravchenko.