The quarterly performance of Latvian investment management companies and investment funds for Q4 2010

25.02.2011
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Riga, 14.02.2011

Press Release

On the quarterly performance of Latvian investment management companies and investment funds for Q4 2010

Financial and Capital Market Commission (the Commission) presents information on the performance of investment management companies and investment funds at the end of the fourth quarter of 2010.

In Q4 2010, investment management companies earned 1.1 million lats and total profit by end-2010 reached 4.5 million lats1  (compared with 2.9 million lats in 2009), whereas the average return on assets (ROA) of investment management companies was 25.1%, but average return on equities (ROE) – 27.8% (compared to 16.6% and 19.3% in 2009).

In the fourth quarter, assets of investment management companies increased by 7.8% and at end-December totalled 19.8 million lats.

Following a slight decrease for two quarters in the row, the assets of investment funds managed by investment management companies grew by 0.5% and at end of the year amounted to 205.8 million lats. Of investment fund assets, 73% were invested in open-end investment funds (compared with 77% on 31 December 2009). Investments of those funds were mainly made in time deposits with credit institutions, 41.3%, and in debt securities and other fixed-income securities, 34.1% (compared with 51% and 34% on 31 December 2009). Whereas investments of closed-end investment funds were mainly made in real estate, 32%, in other assets, 20.6%, in shares and other variable-yield securities, 21.9% (compared to 38.9%, 28% and 1% on 31 December 2009).

In Q4 2010, the amount of investments placed in Latvia decreased by 4.3% and at end of year totalled 126.2 million lats, or 65.2% of total investments. The amount of financial instruments of foreign issuers in investment fund portfolio at the end of Q4 2010 made up 67.3 million lats, of which 28.8% were placed in Russia, 23.9% – in other EU Member States, 25.1% – in other CIS states and 22.2% – in the financial instruments of other countries.

A major income item of investment funds – interest income (90%), fell by 41.8% in Q4 in comparison with Q4 2009. Key expense items of investment fund management – remuneration to the investment management company2  as well as remuneration to the custodian bank3  – at the end of Q4 2010 accounted for 59.5% and 13.4%, respectively, of total investment fund expenses. The proportion of those items to total fund assets at the end of the reporting period made up 0.9% and 0.2%, respectively (the same as at end-Q4 2009).

In 2010, an increase in net assets of investment funds arising from investments was 11.9 million lats (in comparison with 17.9 million lats in 2009).

In 2010 average annual return of open-end investment funds varied from 2.1% to 33.5%, but average annual return of closed-end investment funds carried from -6.1% to 4.1%.

Please find the summary of investment management companies and investment funds’ performance in Q4 2010 on the Commission’s website at www.fktk.lv; Statistics/Financial instruments market/”.

Anna Dravniece
Head of Office
Financial and Capital Market Commission
Phone: +371 6777 4800, email: anna.dravniece@fktk.lv

Prepared by:
Agnese Joela
Public Relations Specialist
Financial and Capital Market Commission’s Office
Phone: +371 67774808; email: agnese.joela@fktk.lv

[1] Non-audited data.
[2] Remuneration due to the investment company according to the provisions of the fund prospectus.
[3] Commission due to the custodian bank according to the provisions of the fund prospectus.

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