The ending of 2018 startled investors, because the market started to decline on a global scale, and hence the return too. According to the official data of the European Fund and Asset Management Association (EFAMA) during the last quarter of the year the activities of the Governments were carried out.
This trend did not miss the native capital market. After three consecutive years of growth, last year saw a net decline in the assets under management of 47.5 million BGN compared to the previous year.
Even though 2018 ended with an overall increase in the total volume of assets, the bitter taste from the winter decline remained in the hands of investors.
The markets have changed their course and are again bringing good profitability
The good news is, the new 2019 is brining enough sugar in order to change them. The markets had a change of course and started to increase again and with them all of their participants. The global stock indexes have been strong for the past four months, with the largest indexes hitting the strongest three-month period since 1998.
The Ѕ & R 500 blue-chip index, representing nearly half of the world's boss capitalization, added more than 15% to its value and is only about 2% away from its highest historical value ever reached.
Even better was the recovery of the emerging markets, led by Chinese indices. The latter marked the largest increase in February for the last four years and stood on top of the ranking for highest increase for the year.
The broad CPI 300 index, which tracking the performance of leading Chinese companies, emerged from "sword territory" (a drop of more than 20% from a recent peak to a bottom) after rising more than 20% up from its bottom on 3rd of January. This was its fastest entry in an upward market in 6 years.
Since the beginning of the year, the CSI 300 index has brought a return on investors of 35.7% or more than twice than the broad S&P 500 US index. The best represented index in the world since the beginning of the year is also Chinese. This is the Shenzhen index, which added 44.2% for the period.
Not only indexes in China, however, enjoyed faster performance from the beginning to the year. The other developing markets noted good results as well, including these in Europe.
Moreover, the Greek main index ASE is the fifth best performing index in the world with an increase from the beginning of the year by 23%. It ranks directly ahead of the US Technology index Nasdaq.
Regional and other indexes in Central and Eastern Europe also brought good returns to investors. Russia's main RTS index rose more than 15%, while those in countries such as Turkey, Hungary, Poland, the Czech Republic and Romania rose between 3% and 10%.
The developed European markets are also in good shape since the beginning of the year. Despite concerns about the slowdown in the German economy and its entry into recession, the German DAX 30 increased by 12.5%. The French CAC 40 added 15.2% to its value and the British FTSE 100 added over 10%, despite the disagreements related to Brexit.
From the beginning of 2019, the Bulgarian funds are divided into two types - those that have caught up and those that have so far failed. Taking a quick look over to the statistics of The Bulgarian Association of the Governing Societies (BAUD) it shows that once again most profitable will be those who have chosen international markets. The reason for that is that unlike the domestic capital market, the leading world indexes have been increasing for the past 4 months, therefore pulling their investors to a profit.
An example of that is MF Compass Global Trends managed by Compass Invest JSC which is among the leading in profitability funds since the beginning of the year with a yield of 12.43% until 30th of April. During the past year the fond was also among the leaders in the market and by the end of the third quarter its profitability reached the impressive 15.64% for the past 12 months.
Even more impressive was that the storm that overtook the markets during the last quarter in 2018 brought a couple of smaller injuries to it compared to other investors. The fund lost only 4.48% by the end of the year in comparison to many global indexes.
Dragomir Velikov, Chief Investment Officer and Head of Business Development of Compass Invest JSC explained the positive results of the fund with the simple strategy of the management company: “MF Compact Global Trends invests in shares of companies that are in a phase of growth. These are companies whose revenues and profits are growing faster than the market average”. In his words, the fund invests in companies with "unique competitive advantages", which operate in the sectors of the economy with the strongest growth. “Our strategy is to choose companies with unique competitive advantages (such as innovative products or services, experienced management and big potential for growth of their market share). These companies must operate in the sector of the economy with the strongest growth”.
According to the other key manager in Compass Invest JSC – the executive director Ivaylo Angarski, who also clarifies the strategy - the results come thanks to the experience:
“Apart from the proper selection of the companies in which we invest, which is a result of many years of analysis and research of these companies and daily monitoring of the market developments, the global market boom has had a major impact due to the sharp change in global risk factors - namely the synchronized market support that came from the leading central banks around the world, optimism about a possible deal between China and the USA and the programs for buyback of its own shares of the companies in the USA”.
“We have chosen a more innovative approach as instead of focusing on industries we have chosen separate investment topics, which follow the development of the world tendencies. The leading topic of the fund is the technological revolution which is taking place in the world at the moment and concerns all sectors of the economy. Among the leading investment topics for us are also cloud technologies, data exchange, biotechnology, innovations in medicine and education, video games and the modern way of life. In the portfolio of the fund there are companies from the field of cyber security, fashion, internet trade, digital payments, streaming services, 5G revolution, social networks and much more", also comments Ivaylo Angarski.
The financial manager also explains that the result of the fund managed by him is due not only to the proper selection of investments but also to the global market growth as a result of the changes in the global risks.