TIRANA, Feb. 16 – After rapid growth in their first three years of operation, the emerging investment funds slowed down in 2015 as declining yields in government securities curbed investments.
Data published by the country’s Financial Supervisory Authority shows net assets in the two investment funds, controlled by Raiffeisen Bank, the country’s biggest commercial bank, grew by only 5.1 percent to 67 billion lek (Euro 475 mln) in 2015, compared to a growth rate of 27 percent in 2014 and more than trebling in 2013, one year after their establishment.
What’s particular about the 2015 performance is that the number of investors slightly declines by 1.6 percent to 32,149.
“This market is dominated by investments in government securities which account for about 70 percent of the funds’ assets with a decline of 5 percent compared to the end of 2014,” said the Authority.
The rapid growth of the emerging investment funds has forced the Albanian government to undertake legal changes strengthening the funds’ risk administration and increasing investor protection.
The International Monetary Fund has also warned that “while these funds have helped diversify the ownership of government securities, they are inadequately supervised and regulated, invest mostly in longer-dated securities and their clients appear to consider these funds as substitutes for bank accounts.”
While traditional bank deposits struggle to remain at positive growth rates due to a sharp cut in interest rates, the emerging investment funds continue registering moderate growth rates fuelled by more favourable interest rates although at slower pace compared the boom following their establishment in 2012.
Currently only two investment funds, Raiffeisen Prestigj and Raiffeisen Invest Euro operate in Albania, making it a pure monopoly market. The funds were established in early 2012 by Raiffeisen Bank Albania, the leading commercial bank operating in Albania. The timing coincided with the decision of Raiffeisen decision to scale back its participation in the public debt market to limit its exposure to the Albanian sovereign debt.
Investments funds represented the second biggest financial market at the end of 2014 with assets estimated at 4.6 percent of the GDP.
The country’s highest financial authorities have recently warned Albanians to be careful with online trading in international stock exchanges, describing such investments as highly risky, especially if offered by unlicensed operators and used by investors lacking appropriate knowledge.
