Dear All,
We want to start the New Year with good news – which we’re happy to say there’s a lot of! First, last year brought gains for those who chose the majority of our company’s products. Second, more and more clients chose those products, internationally, too. And third, we introduced some new very relevant investment opportunities. We’ve begun this year, meanwhile, with aims to further expand our business not just in Lithuania, but also abroad.
We judge the success of our activities first of all in terms of the return that’s earned for clients. In managing the pension fund and retail mutual fund assets entrusted to us by our clients, we earned a significant amount for them during 2017 – 27.1 million euros.
The markets were largely favourable for that last year as both global political events like the elections in France and Germany and economic developments met expectations. That was reflected in the financial markets through rising stock prices, something seen in both developed and developing markets even though returns were partly lowered by the weakening of the US dollar against the euro.
We’re proud of how our team of investment managers was able to successfully take advantage of these developments. When the Bank of Lithuania published last year’s results for the country’s pension funds, it became clear that the funds we manage were the leaders in all categories at the end of 2017 in terms of both their returns for 2017 and for their average returns over the past five years. Clients also recognized this – the number of people accumulating in our pension funds increased during 2017 from 119 700 to 133 000.
In addition, we broadened our palette of 3rd pillar pension funds. When we took over the Swedbank Supplementary Pension Fund in November, another thousand people became participants of our funds.
We also saw a breakthrough in the mutual fund area: as Scandinavian investors took an interest in the INVL Baltic Fund, its assets last year grew from 3.2 to 10.6 million euros. We’re pleased that four of our five mutual funds intended for retail investors had positive returns in 2017, and all the funds that operated during the last five years were profitable over that period, with returns ranging from 20.4 to 66.8 per cent.
The launch of new investment products intended for informed investors also made 2017 noteworthy. The INVL Baltic Forests Fund I, which invests in forests, successfully began operations in February, as did the closed-end INVL Partner Energy and Infrastructure Fund in November. Additionally, our private equity team is creating a 200-million-euro buyout and growth capital fund intended for professional investors.
Meanwhile, the capitalization of INVL Baltic Real Estate reached 31.2 million euros at the end of 2017, growing 22 per cent during the year. INVL Technology’s capitalization fell 15 per cent to 18.1 million euros.
Looking at this year, we see good prospects both in Lithuania and abroad. People in the country have recently been entrusting more assets to management by professionals. The Bank of Lithuania’s latest figures show the indicator* grew 10.3 per cent from the start of 2017 to the end of the third quarter, to 4.25 billion euros.
Considering the opportunities in pension accumulation, we’re believe not just in the prospects for saving in 2nd pillar pension funds, but also in the future of the 3rd pillar, since employers are increasingly recognizing the chance to motivate employees by contributing to their pension accumulation.
What is more, as the success of the INVL Baltic Fund has shown, foreign investors are more and more interested in investments in the Baltic market. We believe that our success in foreign markets will also be helped by the licence we received late last year to manage products intended for professional investors. Management companies with this licence face stricter regulatory requirements – in the long term that will become an advantage when offering investment products on an international scale.
So there have been many positive developments, and we expect even more this year. For our part, we’ll continue working to meet the expectations of those entrusting us with assets to manage, and to broaden investment opportunities – prioritizing the best experience for clients and services that fit their needs.
Wishing you warmth and well-being throughout 2018,
Laura Križinauskienė
CEO, INVL Asset Management
* Pension, mutual fund, life and non-life insurance and annuity commitments excluding non-life insurance technical provisions.