Fri, May 25 2012

Bulgaria’s pension funds ramp up equity investments

Tue, Aug 04 2009 12:32 CET

byDnevnik.bg

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For the first time since the global economic crisis hit Bulgaria, pension funds in the country saw their net assets post hefty gains, upwards of 11 per cent in June, data from the Financial Supervision Commission (FSC) showed.

The increase was helped by steady contributions to universal schemes, which are entitled to five per cent of the social security income of people born after 1959.

Wading deeper in the red, shedding more than 22 per cent of their assets year-on-year, voluntary funds have staged a steady increase in the second quarter, drawing near 485 million leva at the end of June.

The share of equity instruments in the portfolios of voluntary funds rose for the first time in around two years, from 18.4 per cent of the total assets in March to 19.56 per cent in June.

At the same time, investments in government securities thinned out, while the money put in municipal bonds doubled, but still accounted for only 2.16 per cent of the total portfolio of voluntary schemes.

Universal schemes, which have far more conservative investment policies, have lifted the share of stocks to more than 16 per cent from less than 13 per cent of the total assets at the end of March.

This puts the total amount placed in equity instruments by the three types of supplementary pension insurance funds at more than 427 million leva, a whopping increase of 100 million leva from the first quarter of the year.

But pension fund representatives were cautious about a major comeback to the capital markets. "I’m not sure we could speak of a return on stock markets. The difference between the first and the second quarter is so tiny that, after all, it could be due to higher share values from March, " said Miroslav Marinov, finance director of Doverie. Funds managed by Doverie have invested heavily in foreign markets, he said.

For more than a year now, portfolio managers at Bulgaria’s pension insurers have been saying they were cutting back investments in risky instruments, such as shares and equities in collective investment schemes, in order to shield the value of their money. While that did not mean a complete withdrawal from stock exchanges, including the Bulgarian Stock Exchange (BSE), pensions funds have been more cautious.

Source: Dnevnik

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