Pension funds shift money from deposits to T-bills and stocks

Sums placed by managers of mandatory private funds (pillar II) in deposits dropped by 82m lei (20m euros) in the first quarter of this year, from 229m lei (around 55m euros), boosting instead investments in government bonds and stocks.

"Deposit interest rates were lower during this period, so that part of the money was transferred into government bonds. Stock placements also rose amid foreign investors' positive perception. Deposits are safe-haven investments, anyway, with managers waiting for the right time to invest the money in other securities," comments Horia Brau, ING Pensii's investment manager.

Government bond investments rose by 69% in the first quarter of 2011, with their volume hitting 3.28bn lei (800m euros), namely two thirds of total assets managed by pension funds.

Stock placements reached 728m lei (177m euros) in March, from 530m lei in late 2010.

Sums kept in banking deposits are likely to shrink further, say market players, as banks continue adjusting interest rates because they hold enough cash.