Retail investment funds switch categories

In 2017 Q2, funds of a novel type, retail funds of financial market instruments, entered the unit investment fund (UIF) market. In total, three open-end funds of this type were set up and another 13 organisations began operations following the change in category undertaken by open-end funds and one interval UIF of the commodity market.

In late 2016, the Bank of Russia drastically changed its regulatory stance as regards limitations to the composition and asset structure of UIFs. The new regulations (BoR Ordinance No. 4129-U) introduced three categories of UIFs, to replace the former rigid classification: (1) financial instrument funds, (2) real estate funds and (3) composite funds. After the regulations become effective, all open-end UIFs will have one year to become compliant; interval UIFs will, however, have three years and closed-end funds will have ten years.

Newly established funds for qualified investors can be classed as financial instrument / real estate / composite funds; those for non-qualified investors — as financial market / real estate instruments.

Based on the second quarter results, the reporting shows that net asset value of UIFs for non-qualified investors was up 2.8% reaching almost 634.4 billion rubles; the number of these fund owners was virtually unchanged at 1.5 million.

Open-end UIFs of the new category posted net asset value (NAV) of over 2.6 billion rubles as of late June, which is 1.6% of all open-end UIFs’ net asset value; interval UIFs’ NAV totalled 73.3 million rubles, or 1.3% of NAV of interval funds for non-qualified investors.