Investment fund managers have positive estimates for 2024

The prospects of the stock markets and funds with a higher degree of risk are positive for this year, believe the managers of some of the most important investment management companies in our country, according to the opinions expressed yesterday during a press conference organized by Association of Fund Administrators from Romania (AAF).

On the other hand, the exceptional performance of equity funds last year, with nominal returns of even more than 30%, can create unrealistic expectations especially for those who decide to invest now, based on recent performance. Thus, one of the main challenges of fund managers is to make clients understand that investments are made for the long term, based on well-stability plans, which are followed regardless of short-term fluctuations.

• Adrian Negru: "We hope that, in the years to come, we will obtain emerging market status from MSCI as well"

Adrian Negru, the General Director of Raiffeisen Asset Management, is of the opinion that, probably, from a strategic point of view, our country has never been in such a good moment. The fund manager said: "The challenge of 2024 is to continue the trend of the past, the positive dynamics of the number of investors and categories of investors who are increasingly looking to funds. It will be a challenge, both for us and for the distributors, to convey the message that, probably, from a strategic point of view, Romania has never been in such a good moment. On the side of government securities, we have been validated by a certain category of large institutional investors who, for a year and a half - two years, see Romania as a very good investment market".

Adrian Negru added: "With the listing of Hidroelectrica, we have a new category of institutional investors who are looking at Romania, at the Bucharest Stock Exchange, and we hope that, in the years to come, we will have emerging market status from MSCI as well" .

• Horia Braun-Erdei: "As inflation decreases, the courage to reduce interest rates will be greater in an election year"

Horia Braun-Erdei, President/CEO of Erste Asset Management, believes that, at the macroeconomic level, the main challenge this year is inflation. The fund administrator said: "For 2024, we hope that the positive evolution from the second part of 2023 will continue, and we have all the prerequisites for this. Also, regular investments are on a positive trend and we are confident that Romanians have caught the taste of this way of saving".

Horia Braun-Erdei added: "At the macroeconomic level, the main challenge remains the evolution of inflation. A situation has been created in the market where almost all the main asset classes are moving in the same direction. There is not much diversification benefit because the correlation between bonds and stocks has become very high. In 2022 stocks and bonds fell, and in 2023, especially towards the end of the year, both types of asset classes rose. But we, as investors, seek to benefit more and more from diversification. Because we cannot enter the market when everything is going up and exit the market when everything is going down."

In the opinion of the director of Erste Asset Management, the fact that this year there are important elections both globally and in Romania, will probably make the economic policies somewhat looser than they would have been under other conditions. "Probably fiscal policies will not move to a consolidation zone; governments will continue to run relatively large deficits, perhaps down slightly from previous years, but not significantly. And in terms of monetary policies, as inflation falls, the courage to cut interest rates will be greater in an election year. From this point of view, the constellation of economic policies is very favorable for equities and risk assets in general," said the fund manager.

• Dan Popovici: "The idea is not to invest so that, in the next ten years, you will get a return of 10-12% per year"

Dan Popovici, CEO of OTP Asset Management, pointed out that investments must be based on a long-term plan, not recent performance.

The director of the investment management company said: "2023 was a very good year for the markets and therefore for the investment fund industry. All the funds had a consistent increase, but we saw an increase in the number of clients in equity funds after we started showing very good returns. This shows that there is a certain category of investors for whom the performance sells. Or this should not happen".

Dan Popovici added: "You should invest because you have an investment plan, because you want to achieve something in the long term. You should invest because you believe in a product that actually has the Romanian economy or the global economy behind it. Or that that product invests in companies that innovate. I think this is a message we should send to customers (...). We can tell them that historically, in the medium and long term, the capital market has brought a return (annualized) between 8 and 12%. This would be the reason to invest in an equity fund. The idea is not to invest for the 30% that the fund has already brought, but to get a return of 10-12% per year in the next ten years".

• Mihai Purcărea: "Clients invest when the market rises and sell when the market falls; it's something against a rational investment, but that's how our brain works"

Mihai Purcărea, the General Director of BRD Asset Management, believes that the main challenge this year for the investment fund industry is to keep clients invested.

"Unfortunately, clients invest when the market goes up and sell when the market goes down. It's somewhat contrary to a rational investment, but that's how our brain works. Last year was very good and then there is a risk that clients will appear who invest now only based on performance (n.e. recent) without assuming a longer investment period, understanding that the market has cycles. They will invest and at the first dips they will be very unhappy. It's something that unfortunately happens, and we have to prepare customers to understand these fluctuations. Let's explain to them that we are talking about investments and not short-term speculation," said the director of BRD Asset Management.

• Călin Meteş: "I think that several private companies that were flirting with the idea of attracting funds from the capital market will look very carefully at this perspective"

Călin Meteş, Deputy General Director for investments of Franklin Templeton Bucharest and Deputy Portfolio Manager of FP, expects that after the listing of Hidroelectrica last year, in 2024 we will see other listings on the Bucharest Stock Exchange. "I also have in mind the fact that the market is growing rapidly at the level of funds, and here we are talking in particular about Pillar II of pensions for which the contribution has increased from 3.75% to 4.75%. So pension funds will have even more money to invest. Therefore, I think that several private companies that were flirting with the idea of attracting funds from the capital market will look very carefully at this prospect", said Călin Meteş. "Coupled with the reduction in interest rates in the second part of the year, I expect to see a higher appetite for IPOs, which will attract even more interest from both retail and institutional investors."