Bond investors raked in big losses last year and money continued to flow out of funds specialising in bond investments, according to an analysis published by Portfolio on January 11. Of the 69 bond funds available for retail investors, only 12 reported positive returns.
Bond funds managed some HUF1.2 trillion (€3.74bn) in savings in 2017, which dropped to HUF900bn by the end of 2018.
Last year funds managed by members of the Hungarian investment fund association Bamosz registered net outflows in every month of the year except for January. Investors piled money into property funds, which increased their size by 40% to HUF1.4 trillion as of December. By the end of November, the total assets of Bamosz funds reached HUF6.3 trillion, up 2.7% y/y.
Bond yields surged on both the short and long end of the yield curve in the middle of the 2018, eroding bond prices, after hitting record lows in early 2018. Yields in all maturities retreated from yearly highs but remained at elevated levels.
Investments in short maturity bond funds plummeted to HUF474bn at the end of 2018, down from HUF707bn a year earlier, a 33% annual decline.
OTP Optima, the largest fund, managed HUF162bn in assets, down from HUF230bn a year ago. Of the 15 top short bonds, K&H’s fund was the best performer with an annual loss of only 1.1%.
Bond funds that invest in long-maturity bonds reported better results, Portfolio noted, with a combined loss of 4.1% in net asset value. K&H Kotveny managed HUF77bn of investments, up from HUF72.5bn a year earlier. Budapest Bank’s fund Budapest Alap ranked third, but saw its net asset value plunge 40% to HUF70bn.
The top performer was Aegon’s bond fund which invested in Polish bonds, which generated a 4.25% yield for investors.