The FNI crash and the high yields in the banking system have hindered the development of mutual funds.
The Romanian mutual fund market is 72 times smaller than the Hungarian one, 60 times smaller than the Czech one and 34 times smaller than the Slovakian market, in line with statistical data released by the US-based Investment Company Institute (ICI).
The Polish market, with an almost double population, is no less than 161 times bigger than Romania''s.
Net assets of Romanian mutual funds revolved around 66 million euros at the end of the first half of this year, according to the same source, as compared with about 2.3bn euros in Slovakia, 3.9 billion euros in the Czech Republic and more than 4.7bn euros in Hungary.
Slovenia and Croatia are also ahead of Romania in this respect. The Slovenian mutual fund market is worth 1.2bn euros, while the Croatian market is also close to one billion euros. Among the countries in this region that have a mutual fund market, only Bulgaria lags behind Romania, with assets held by Bulgarian mutual funds totalling about 37 million euros.
The main factors hindering the development of mutual funds were the scandals triggered by the collapse of the Mutual Businesspersons Fund (Fondul Mutual al Oamenilor de Afaceri - FMOA) and of the National Investment Fund (Fondul National de Investitii - FNI), which have eroded the Romanians'' confidence in collective placement bodies.
"The current situation is mainly due to the extent of the 1996 and 2000 financial crises, when the funds owning about a quarter of the total assets on the market crashed, seriously hurting Romanians'' confidence in mutual funds," said Doru Tiberiu, general manager of BCR Asset Management. "Another important factor is the low share of savings, as the Romanians'' money has so far been mainly directed to consumption," Tiberiu added.
The high yields that banking deposits offered until last year were another hurdle in the way of a more rapid development of the mutual fund market.
"Until last year, one could easily get 20-25% from a bank. In this context, investors had no reasons to move their money from banking deposits to higher risk investments," showed Razvan Rusu, a portfolio manager with investment management company Certinvest.
Finally, some managers say that the lack of instruments in which mutual funds could place capital drawn from investors also stood in the way of a speedier development of the mutual fund market.
"The main role of a mutual fund is that of an intermediary between small investors and the financial instruments that are not accessible to them.
"The problem is that we do not have as yet a financial instrument market that is sufficiently developed so as to sustain a more rapid growth of mutual funds," explained Florin Dolea, CEO with CA IB Asset Management, the investment management unit of HVB group.
Romanian mutual fund market
n 72 times smaller than the Hungarian market, 60 times smaller than the Czech market, 34 times smaller than the Slovakian market
n Net assets owned by mutual funds - worth 66m euros at the end of the first half of this year
n Market growth was hurt by scandals triggered by the collapse of FMOA and FNI, the small size of savings, the high yields offered by banking deposits, the lack of instruments mutual funds could place capital in.
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