TIRANA, Feb. 8 – Investment funds returned to double digit growth rates in 2017 after suffering a modest contraction in 2016, the first since their establishment in 2012 and rapid growth in the following three years.
A report by the country’s Financial Supervisory Authority shows net assets in the three investment funds rose by an annual 11.4 percent to 72.7 billion lek (€547 mln), accounting for about 5 percent of the country’s GDP.
The double-digit hike comes as a new Albanian-run investment fund has been operational since mid-2016, breaking the monopoly held by the Albanian subsidiary of Austria’s Raiffeisen Bank with its two investment funds.
The hike also 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.
The number of investors in the three investment funds rose by 7 percent to 31,314 at the end of 2017.
The emerging investment fund market is dominated by investments in government bonds and T-bills, accounting for about 80 percent of total assets.
Yields on 2-year notes, the government’s key domestic instrument for long-term internal borrowing, rose by 0.12 percent to 3.35 percent in last January’s auction, up from 2.55 percent last June, but were down from 3.8 percent in January 2017.
Meanwhile, yields on 12-month T-bills, the government’s key instrument for short-term internal borrowing, slightly rose to 2.67 percent this week, on a constant upward trend since last March when they stood at 2 percent, according to Albania’s central bank.
Operational since early 2012, the two Raiffeisen-run investment funds and Credins Premium, a newly launched Albanian-owned fund, have increased their market share to 5 percent of the GDP, but yet account for only 7 percent of the bank deposits.
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.
