Dear investors, please find below the performance results of mutual funds managed by OTP Capital.
Actions of the NBU
Macroeconomic environment in Ukraine in May 2024:
the key policy rate is kept at 13.5%
inflation since the beginning of the year amounted to 1.4%
increased demand for long-term government bonds
decrease in the yields of domestic government bonds
increased demand for foreign currency purchases – weakening of the hryvnia
National currency instruments
DOMESTIC GOVERNMENT BONDS. The Ministry of Finance began to reduce yields on hryvnia domestic government bonds at primary auctions for the entire line of domestic government bonds
up to 1 year – 14.9%
from 1.5 to 2 years – 15.9%
up to 3 years – 16.6%.
Deposits. Time deposit rates remained unchanged at 5.0%-12% depending on the term and bank
Hryvnia exchange rate against the dollar. The NBU continues its policy of easing the foreign exchange market and helping the market avoid peaks. In May, there was a strong demand for foreign currency, but the regulator did not prevent the hryvnia from weakening, maintaining moderate interventions. As a result, the official hryvnia exchange rate weakened by 2.3% from UAH 39.66 to UAH 40.59 per dollar, and the cash exchange rate by 3.1% to UAH 41.11 per dollar.
Equities. The UX equity index continued its downward trend in May, losing 7.7%. Once again, we note that the lack of liquidity in the equity market is the main feature of the stock market under martial law. The main factors behind the decline were the following stocks in the index basket: MHP – 33.3%. PJSC Donbasenergo, -6.7%.
Instruments in foreign currency
DOMESTIC GOVERNMENT BONDS. Yields on foreign currency-denominated domestic government bonds remain unchanged in 2024 at primary auctions at 4.6%-4.7% in the dollar and 3.25% in the euro. However, by imposing restrictions on the volume of placements, the Ministry of Finance is forcing investors to compete on the basis of yield to maturity. On the secondary market, yields on foreign currency domestic government bonds do not exceed 4.3% in the dollar and 3% in the euro.
EUROBONDS. Demand for Ukraine’s Eurobonds is highly volatile and, as a result, the prices of domestic government bonds are highly volatile, which is reflected in the fund’s performance. In particular, in anticipation of the decision on the restructuring of the external debt from the government, the prices of government bonds fell by 2.4%-4.1% in May. The price in dollars of government bonds maturing in 2025, which are in the portfolio of Free Flight NPF, decreased by 3.2%.
What happened to the assets of the fund managed by OTP Capital?
OTP Classic
In the reporting month, UAH 8.2 million of government bonds were sold from the portfolio of OTP Classic fund and UAH 5.1 million of government bonds with better yields were purchased instead.
Effective rebalancing of the portfolio in the amount of 9%-12% of total assets and a decrease in yields across the entire line of government bonds accumulated into a high result of the fund for the reporting month. In May, the OTP Classic fund earned 1.8% (or 23.1% p.a.) for its participants.
OTP Children
In the reporting month, UAH 3.2 million of government bonds were sold from the portfolio of the OTP Children fund, and UAH 3.5 million of government bonds with a better yield were purchased instead.
Effective rebalancing of the portfolio in the amount of 51% of total assets and a decrease in yields across the entire line of government bonds accumulated into a high result of the fund for the reporting month. In May, the OTP Children fund earned 3.4% (or 47.6% p.a.) for its participants.
OTP Currency
In the reporting month, no active operations were carried out with the assets of the OTP Currency fund’s portfolio.
The growth in the price of government bonds maturing in 2027, which is present in the fund’s assets, compensated for the decline in the value of short-term government bonds in May and allowed the OTP Currency fund to earn 0.2% (or 2.2% p.a.) in dollars.
OTP Equity Fund
In May, OTP Equity Fund was managed in the direction of re-investment in short-term deposits at maximum rates, in particular, deposits in JSC Ukreximbank in the amount of UAH 0.87 million, JSC Ukrgasbank in the amount of UAH 0.87 million, and JSC Tascombank in the amount of UAH 0.87 million were reallocated.
The growth of Raiffeisen Bank shares and the deposit part of the fund helped to show a good result in May – OTP Equity Fund earned 16.7%.
We will continue to work. So let’s stay calm, believe in Ukraine and invest consciously!
