Russian investment funds lose inflows and ratings in Q2

Open-ended investment funds in Russia have lost assets this quarter, and have consequently experienced a drop in ratings awarded by Investfunds, Russia’s leading information portal for the fund industry.

Investfunds created its own fund rating methodology this year, using the methods of Morningstar as a guide and information from its own databases. Under the new rating system, funds are awarded from one to five stars, five being the best result. Only those funds that have beaten the market benchmark and their competition can gain four or five stars.

The most significant negative change was felt by Russian equity funds, while mixed funds have fared comparative better. From a list of 102 equity funds, 53 have had their ratings reduced. Of 74 mixed funds, only 20 have been downgraded. “This proves that higher diversification benefits fund performance in periods of high volatility,” says Sergey Zobov, head of Investfunds.

The reliability of the new rating system is debated by Russian fund managers. Some are concerned that the results are too sensitive to quarterly fluctuations and do not reflect the real historical picture.

For example, Vladimir Tsuprov, CIO of TKB BNP Paribas Investment Partners, pointed out that Russian equity funds have brought in the highest dividends in the history of the Russian market this quarter, which has affected short-term cash-flows. The positive effects will only be evident next month, he explained.

But many fund professionals welcome the creation of a Russia-specific rating system, which will allow a more informed choice of investment manager for fund selectors making allocations in Russia.

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