Czech investors are celebrating as mutual funds, which hold 750 billion Czech crowns, are performing well this year. Mutual funds are a popular investment option worldwide, and the Czech Republic is no exception. The fact that Czechs have invested over 700 billion Czech crowns in these funds is a testament to their popularity. Overall, investors can be pretty satisfied with their performance since the beginning of the year.
Some of the major players in the Czech market managing these funds include Erste Asset Management, ČSOB Asset Management, Amundi, Conseq, and Generali Investments. Together, they oversee more than 430 billion Czech crowns. These companies offer a wide range of funds covering various investment strategies and catering to the preferences of savers.
Mutual funds are investment instruments established and managed by investment companies. They do not have a legal status of their own. Individual investors participate in these funds by purchasing shares. The investment company then invests the collected funds using a predetermined strategy to generate returns. Investors earn profits from the difference between the purchase and sale of shares, minus any fees. Mutual funds are suitable for anyone, whether beginners or advanced investors, regardless of their investment size. They are primarily intended for long-term investments, as the longer an investor holds the shares, the more potential returns they can achieve.
Exiting an open-end mutual fund is easy, as the investment company must repurchase shares at the current price once the investor requests it. Open-end mutual funds also offer the advantage of no time restrictions, as they are open indefinitely. The most common types of mutual funds include equity funds, mixed funds, bond funds, real estate funds, structured funds, and money market funds.
Since the beginning of the year, equity funds have performed the best, with some even achieving double-digit returns. On the other hand, bond funds have slightly lagged in their performance but have remained in positive territory since January. The difference in performance is mainly attributed to the fact that equity funds are generally associated with higher risks than bond funds. However, higher risk can also lead to higher returns and vice versa.
Additionally, readers can examine the performance of these funds over the past year and five years. It should be noted that historical performance is not a guarantee of future returns. Nevertheless, the table provides a snapshot of what investors currently believe in and what is performing well. The year’s first quarter was a period of volatility and changes for the markets. Still, despite turbulence in the banking sector, most assets saw positive growth in stocks, government bonds, loans, and emerging markets. The only exceptions were commodities, which experienced losses throughout the first quarter.
According to Martin Řezáč, the CEO of Erste Asset Management in the Czech Republic, the first four months of this year were much more favorable for investments than the previous year when most assets, except for energy commodities and cash, declined due to inflation concerns. He emphasized that short-term results should not be overestimated, and it is always meaningful to compare performance over the relevant investment horizons, which are calculated in years. Řezáč stated that the funds in their portfolio achieved excellent performance in the first four months of 2023, with an average return of over four percent since the beginning of the year. Marek Beneš, the CFO of Generali Investments CEE, also praised the performance of their funds, noting the positive results in equity and more conservative funds.
According to the Association for the Capital Market of the Czech Republic, the assets held by Czechs in mutual funds exceeded 749 billion Czech crowns in the first quarter of this year, an increase of more than 10 percent compared to last year. The net inflow of money to mutual funds reached approximately 3.6 billion Czech crowns in March alone. This shows that mutual funds remain a popular investment choice for Czech investors, and their positive performance further reinforces this trend.