BCR and BRD about to storm Romanian mutual funds market

Banking deposits rates keep dropping, pushing many investors to look for more profitable investment options. Since the revenues derived from interest rates and insurance will be encompassed by the global income tax as of 2004, cautious investors are already looking at funds – although no one knows for sure whether they will remain a safe haven for long.
The banks are bracing for a growing market. The companies managing the investments of Romania’s largest banks, BCR (Romanian Commercial Bank) and BRD (Romanian Development Bank) are preparing to launch two mutual funds, aimed at promising markets. BCR will come out with a fund that will invest the bulk of its assets in shares listed on the Stock Exchange. “The fund will most likely enter the market at the end of the first quarter and will invest about 40% of its assets into shares listed on the Bucharest Stock Exchange,” Doru Tiberiu Puiu, head of BCR Asset Management, told Ziarul Financiar.
BRD also has a new mutual fund in mind, which will invest in low-risk monetary instruments, including municipal and corporate bonds, all the more so since a bond market boom is expected in the next years.
Many local authorities and companies have voiced plans to contract loans through the bond issue.
On the other hand, the company managing the Romanian Development Bank investments, Societe Generale Asset Management (SGAM) is also planning to launch another equity fund, but not in the near future.
“The share market is not liquid enough to launch an equity fund, but the growth outlook is good,” said Dan Nicu, SGAM director.
BCR Asset management will place money on the bond market through an existent fund, BCR Clasic. “We aim to invest up to 25% of the fund’s assets into municipal bonds,” Puiu said.
Funds invested more money into bonds last year, while some of the other managing companies are also considering specialised funds for such instruments.
To start operating, the new funds need the secondary legislation of mutual funds to be enacted by the National Securities Commission (CNVM). “We are now working on these regulations, which will be enacted by the beginning of February at the latest,” said Paul Miclaus, a CNVM commissioner.
The banks’ entry on the mutual funds markets has attracted new investors, but it has already generated migrations – to the dismay of the smaller funds, which have seen their clients lured away by the more solid and tempting promises of banks.