Mutual funds (TFI PZU)

Market situation

As at the end of December 2017, the overall domestic mutual fund market’s assets were PLN 279 billion compared to PLN 259 billion at the end of the year before, representing an increase by more than 7,7%.

In 2017, according to the estimates of the Analizy Online service, the balance of payments to and withdrawals from retail funds offered by investment funds in the domestic market exceeded PLN 14 billion. The most popular products among clients were cash and money market funds (with inflows of nearly PLN 8 billion and over PLN 9 billion increase in assets), debt funds (with inflows of nearly PLN 4 billion and an asset increase by over PLN 4 billion during the year) and mixed funds (to which clients paid over PLN 3 billion and whose assets increased by as much as nearly PLN 5 billion).

Mutual fund companies - share in assets as at 31 December 2017 (%)

Source: Chamber of Fund and Asset Management

As a result of good market climate, an increase in assets of over PLN 4 billion was recorded by equity funds, despite clients withdrawals of nearly PLN 1 billion. This was a difficult year for non-public funds – their assets shrank by over PLN 3 billion.

Within the PZU Group, there are 3 Mutual Fund Companies operating in the market: Pekao TFI, Money Makers from the Alior Bank Group. CHAPTER 3.4 BANKING and TFI PZU.

TFI PZU’s operations

Towarzystwo Funduszy Inwestycyjnych PZU (TFI PZU) operates on the mutual fund market in the PZU Group. It offers products and services for both retail and institutional clients – including additional investment and savings programs forming part of the third pillar of the social security system: Individual Retirement Accounts (IRAs), Specialized Investment Plans, Employee Pension Plans (EPPs), Company Investment Plans (CIPs), and Group Pension Plans (GPPs) which additionally offer Individual Retirement Security Accounts (IRSAs).

At the end of 2017, TFI PZU had 30 funds and sub-funds in its portfolio, of which 23 were also offered to clients from outside the Group.

At the end of December 2017, TFI PZU managed net assets worth nearly PLN 20 billion, representing close to a 7.1% market share. Accordingly, TFI PZU is among the largest mutual fund companies in Poland – as at 31 December 2017 it was ranked third in Poland according to reports published by IZFiA (Chamber of Fund and Asset Managers). TFI PZU is also a market leader in the employee pension plan segment among the institutions operating on this market with net assets of more than PLN 4 billion.

TFI PZU’s net assets (PLN billion)

Source: IZFiA

The decline in the total value of TFI PZU’s net assets as at the end of 2017 was mainly caused by withdrawals made by the PZU Group in various funds: PZU FIZ Forte, PZU FIZ Medyczny, PZU Dłużny Rynków Wschodzących and PZU Energia Medycyna Ekologia, as well as withdrawals made by external clients.

However, without accounting for this effect, in 2017 TFI PZU recorded an increase in the value of external clients’ assets which resulted predominantly from:

• active sales of funds and subfunds – with a particular focus on increase of the assets in the PZU FIZ Akord fund based on the Global Macro strategy,
• further increase in the distribution and efficiency of cooperation with distributors,
• introduction of new Employee Pension Plans and Group Pension Plans,
• acquisition of assets of foreign banks.

Factors, including threats and risks, which will affect the mutual funds’ operations in 2018

The condition and performance of the mutual fund market will depend mainly on:

• developments in the geopolitical situation – potential military conflicts (Syria, South Korea);
• increasing global protectionism – NAFTA, customs in USA- China trade exchange;
• political situation – including elections in Italy, Brazil, Mexico;
• macroeconomic situation, mainly pace of economic growth and inflation path (wages inflation, if any) in developed countries;
• central bank actions (FED, ECB, Bank of Japan) and pace of monetary policy tightening;
• the economic climate on financial markets.