EFAMA chief: Romanian mutual funds will peak up in the next 15 years

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The Romanian fund industry is currently the last in Europe, with assets under administration worth some 246 million euros as of the end of the first half of 2008, which indicates the market potentials; in the next 15 years, the assets might increase 100 times, says Chairman of the European Fund and Asset Management Association (EFAMA) Mathias Bauer.
 
There is a favorable future for the Romanian funds, says Bauer, adding that in the next ten to fifteen years, fund assets will increase up to 24 billion euros, which would be a 100-fold increase, but only if the trustees conduct their business fairly and transparently and win the trust of Romanian investors.
With a 12-year history tarnished by the bankruptcies of the Mutual Fund of Business People, the National Investment Fund (FNI), and the National Accretion Fund (FNA) in the late 1990s, the Romanian mutual funds have a lot ground to recover to make for their European counterparts.
 
Over the past 6 years, the assets of Romanian mutual funds have increased constantly, peaking up in 2004 at RON 0.4 billion, some hundreds of millions euros, or an 80-fold rise. The rise is said to have been sustained by positive developments in exchange trade, and also by the entry of big players, such as Societe Generale and Raiffeisen.
 
The relatively early stage of development of the local fund industry has greatly shielded the Romanian mutual funds against the international financial crisis. Thus, assets managed by Romanian mutual funds declined 7.3% in the year to June 2008, while mutual funds in Europe reported a 9.4% decline, to 5,584 billion euros in the same interval and net outflows worth 101 billion euros.
In order to face stock exchange corrections and protect investors, Romanian trustees have decided to cut administration fees and increase buyback fees in an attempt to hedge investors against speculators.
 
Bauer says investors choosing their fund according to the return on investment rates is not limited to Romania, as the same rate is the main selection criterion on mature markets, although that is not a normal behavior.
As regards the developments in mutual funds, the EFAMA official says security funds will continue to grab attention in 2009, amidst falling interest rates Europewide.
 
In the first half-year of 2008, European transferable securities funds lost 64 billion euros, with the Romanian fund market being the only one in Central and Eastern Europe to close H1, 2008, on net inflows of 20 million euros.
Transferable securities funds, says Bauer will become increasingly more attractive to investors in the following 12 months, because interest rate will enter falling trends. The second most attractive funds will be the share funds, and lastly the monetary funds, Bauer predicts.
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