Almost 100,000 investors are betting on money market funds

The mirage of three digit returns offered by stock market funds in 2009 left most investors unimpressed, as they continued to favor less risky investments in money market and bond funds.

According to data published by the Association of Fund Managers (AAF), money market funds, which have a low risk degree, attracted the most money from investors last month, as net subscriptions reached 21.1 million lei. At the other end of the spectrum, investors pulled 6.3 million lei from diversified funds.

The number of investors in open-end mutual funds last month hit the historic mark of 200,000, with money market funds accounting for approximately half of that number. For comparison, closed-end investment funds had 91,564 investors.

Only two funds succeeded in raising more than 10 million lei last month, one of them being a money market fund. Raiffeisen Monetar, managed by Raiffeisen Asset Management, last month raised 27.3 million lei from investors.

Raiffeisen Monetar has net assets worth 923.3 million lei, and is the second largest fund on the market, after BCR Monetar. Together, the two funds have almost 80,000 investors.

Even though money market funds invest mostly in bank deposits, investments in such funds are not guaranteed, unlike bank deposits, which are guaranteed up to 50,000 Euros.

Another fund that had net subscriptions of more than 10 million lei in July is Raiffeisen Euro Plus, also managed by Raiffeisen Asset Management, followed by BRD Euro Fond, managed by BRD Asset Management, which had net subscriptions of 2.3 million lei, according to data from the Association of Fund Managers. The two funds which had invested in Euros came to the attention of investors after the strong depreciation of the leu since the beginning of the year.

The value of net subscriptions to investment funds reached 39 million lei at the end of July, "amid higher redemptions", according to data published by the Association of Fund Managers (AAF).

Eugen Voicu, the head of Aviva Investors Romania, said that his company saw its assets increase 30% so far.

"2010 saw last year"s upward trend continue and I believe there is a good chance of seeing our assets under management double by the end of the year, or see a 70% increase by a more conservative estimate", said Mr. Voicu.

The total value of assets managed by open-end investment funds reached 4,79 billion lei at the end of July, up slightly compared to the previous month"s value of 4.67 billion lei.