Statistics 2 May 2016 1:00 PM

Market developments led to capital outflow from investment funds

The fund capital of investment funds registered in Finland declined by EUR 1.7 bn, i.e. 1.7%, in the first quarter of 2016. A large part of the decline (EUR 1.4 bn) was explained by negative valuation changes and the rest (EUR 0.3 bn) by redemptions.

The valuation adjustments were due mainly to exceptionally large declines in prices in the key stock markets in the first months of the year. The value of equity funds dropped by EUR 2.8 bn in January-February, but recovered by EUR 1.0 bn in March. Consequently, the total value loss accrued during the first quarter was EUR 1.8 bn. By contrast, fixed-income funds developed favourably in January-March, and e.g. the value of bond funds rose by EUR 0.6 bn.

The largest net subscriptions in the first quarter were in real estate funds and bond funds. Capital inflows into real estate funds amounted to EUR 0.3 bn, and redemptions from bond funds totalled EUR 0.7 bn.

Valuation changes reflect both share price declines and exchange rate movements

In the first quarter, the value of Finnish funds' equity investments was affected most by developments in Europe, the United States and Japan. In addition to share price declines, exchange rates also played a key role.

In euro terms, the largest valuation changes in the first quarter of the year were in equity investments in the United States and non-euro area European countries, both of which registered a value loss of over EUR 0.4 bn. However, share price movements do not fully explain the observed developments. Particularly with regard to US shares, the actual price collapse only accounted for 10% of the total valuation adjustment, as the depreciation of the dollar against the euro simultaneously led to a significant reduction in the euro-denominated value of investments.

Meanwhile, the value of investments made domestically and in other euro area countries and Japan fell, mainly as a result of declining share prices.

In relative terms, the value of equity investments in China recorded the largest decline, more than 13%. Even so, the change due to Chinese shares remained fairly small in absolute terms, as equity investments in China accounted for a relatively small proportion of all investments.

         Valuation changes in Finnish funds' equity investments by country

Finnish investment funds' assets in the BRICS countries 2009–2014

Key statistical data on investment funds registered in Finland, preliminary data

For further information, please contact
Tommi Aarnio, tel. +358 10 831 2480, email: tommi.aarnio@bof.fi,
Topias Leino, tel. +358 10 831 2315, email: topias.leino(at)bof.fi.

The next investment fund news release will be published at 1 pm on 1 August 2016.

You can subscribe for email receipt of the quarterly Investment funds news via the Bank of Finland website.