Thriving Equity Funds Beat Inflation: A Review of the Czech Market

The performance of equity funds in the Czech Republic has been remarkable in the past year. These funds have seen a robust increase of 18 percent, easily outperforming the expected inflation rate of around 11 percent for 2023. The numbers from the Partners index of equity funds reveal that these funds appreciated by five percent in December alone.

Bond funds also had a relatively good year, growing by two percent in December and ending with an 8.7 percent appreciation for the entire year. Mixed funds reacted to the growth of equities and bonds and grew by 3.2 percent at the end of the year, totaling a growth of 11 percent for the year.

According to Martin Mašát, an economist of the financial group Partners, the positive sentiment in the financial markets crescendoed towards Christmas. He attributed this to the ‘gifts’ doled out by central banks worldwide, without exception.

The American Federal Reserve (FED) was the first to influence financial markets, where doves took the forefront after a long time. In a similar vein, the meeting of the European Central Bank resonated. The Czech National Bank then came with the first lowering of the base rate.

For 2024, American central bankers expect several reductions in base interest rates. A similar opinion was observable after the meeting of the European Central Bank, according to Mašát. With less fear of inflation and high-interest rates, this sentiment positively affected the prices of all financial assets towards the end of the year, leading to more than solid numbers shown by both equity and bond funds.