Mutual funds take a hit in 2011

The value of investors' assets in mutual funds tumbled 23.4 billion Kč ($1.2 billion/919.7 million euros) to 224 billion Kč last year, with foreign as well as domestic funds registering a decrease, according to the Czech Capital Market Association (AKAT).

"There are clear signs of a period of fasting on our market," said AKAT Chairman Josef Beneš at a press conference Feb. 22. "This trend should continue this year."

The value of assets in foreign funds fell 9.3 billion Kč to 115.8 billion Kč, while assets in domestic funds decreased 14.1 billion Kč to 108.2 billion Kč.

It's an overall down market, but the more dramatic drop seen in domestic funds was less a function of the risk those funds posed and more of the type of investors who typically buy those funds, investors who are more likely to withdraw their investment on negative news, according to Jan Šimek, a financial analyst with Broker Consulting.

"There is a difference, because the investors in domestic funds are less aware of investing in general, contrary to the investors who invest in foreign funds," Šimek said. "The investors who decided to invest in foreign funds are more experienced, thus they are more disciplined and they don't panic so much."

Money market funds fared the worst last year, losing 44.4 billion Kč in managed assets, but AKAT says this stemmed mostly from the fact that eight major money market funds were reinvested as bond or mixed funds last year.

Equity and secured funds also registered a decrease last year, losing 4.8 billion Kč and 5.5 billion Kč in assets, respectively, but assets grew in the categories of bond, mixed and real estate funds.

The largest brokers of mutual funds were ČSOB Group with 69.5 billion Kč in assets, followed by Česká spořitelna with 64.2 billion Kč and Komerční banka with 27.1 billion Kč.

Šimek said investors will continue to be conservative this year, and despite the reinvestment of several money market funds as other types of funds last year, which hurt the total of assets in that category, money market funds will be the most popular on the domestic market.

Emily Thompson can be reached at
ethompson@praguepost.com