TIRANA, May 29 – Albania’s investment funds suffered a slight contraction in the first quarter of this year despite a new fund launching its operations in the country and taking the number of operators to four.
A report by Albania’s Financial Supervisory Authority shows net assets in the country’s four investment funds at the end of March 2018 dropped by 3.9 billion lek (€30.7 mln) to 68.8 billion lek (€539.3 mln), down 5.4 percent compared to the end of 2017, and 2.9 percent less compared to the first quarter of 2017.
The slight contraction is a result of the number of individual investors dropping to 29,930, down 1,305 compared to early 2017.
The slight market contraction comes at a time when the emerging investment funds registered strong growth of 11.4 percent in 2017 after suffering a modest contraction in 2016, the first since their establishment in 2012 and at a time when a new operator entered the market.
Macedonian-Austrian-owned WVP Top Invest launched its Albania operations in March 2018 after being licensed by the country’s Financial Supervisory Authority. The fourth investment fund had net assets of about 75 million lek (€590,000) at the end of the first quarter of this year, according for a mere 0.11 percent of the market assets.
Operational since early 2012, the two Austrian-owned Raiffeisen-run investment funds and Credins Premium, an Albanian-owned fund operational since late 2016, have increased their market share to 5 percent of the GDP, but yet account for only 7 percent of the bank deposits.
The emerging investment fund market is dominated by investments in risk-free government bonds and T-bills, accounting for about 80 percent of total assets.
Investment funds also invest a considerable part of their assets in corporate bonds and other assets, placing investors at risk.
The market expansion in the past few years comes at a time when interest rates in traditional deposits stand close to zero and investments funds, overwhelmingly investing in government securities, offer much more profitable investment alternatives.
In its latest country report on Albania, the International Monetary Fund warns that investment fund supervised by the country’s Financial Supervisory Authority, lack an adequate crisis management framework.
“It is critical that the Albanian Financial Supervisory Authority completes the crisis management framework for investment funds, in coordination with the Bank of Albania and the Ministry of Finance,” says the IMF.
