SIFs, albatross around mutual funds'' neck

The sharp decline on the Bucharest Stock Exchange in the second half of May, led to yields of the mutual funds investing in shares, calculated since the beginning of the year, to drop to negative values. Five months into this year, equity and diversified funds are seeing fund unit declines of 1 to 9%, a situation unheard of over the last few years.

The losses made by the investors in the mutual funds were primarily caused by the performance of the SIFs. The SIF stocks, which generated some of the highest yields on the Bucharest Stock Exchange last year, account for significant shares in the portfolios of every equity and diversified mutual fund. In May, however, the BET-FI index, which gauges the performance of the five financial investment companies lost 13.8%, and has dropped by 14.6% since the beginning of the year.

“The SIFs have dragged the entire market down, including the mutual funds, but the SIFs are also the ones that have the potential to drive the resurgence of the market. This is why most fund managers continue to gamble on SIFs,” stated Laurentiu Rosoiu, investment consultant with Swiss Capital Asset Management, the company that manages the Active Dinamic equity fund.

Equity funds in May witnessed 5 to 9% declines and diversified funds lost 2 to 6%.