mast image

Special Report

Impact investing

Sections

First Bulgarian fund fails minimum mark

Related images

  • First Bulgarian fund fails minimum mark

Related Categories

BULGARIA - A Bulgarian pension fund has failed to generate the minimum rate of return set by the supervisor for the first time since the three-pillar pension fund system was created in 1999/2000.

The second-smallest fund company in the pension system, “Future”, saw its universal pension fund (UPF) fall below the minimum mark and will now have to makel up the difference from company assets.

According to statistics for the third quarter 2008, the “Future” UPF fund was the one with the highest exposure to equities with 37.38%.

The minimum rate of return to be achieved is set by the pensions supervisor for a 24-month period and FSC has now announced it to be -6.98 for the UPF and -8.51 for occupational funds (PPF).

No minimum rate is set for the third pillar VPF.

The average equity holding exposure among the nine universal pension funds in the market was just over 20%.

Despite the developments at Future, the system as such is still sound and running, stated Miroslav Marinov, chief financial offiecer of PAC Doverie, the largest pension company in the market.

“[Future] is only a small pension company,” he noted, and added “people still believe in the system”.

“The most important issue now is information,” added Marinov, who said his company is in the process of trying to explain, through various communication channels, the current financial situation to its clients.

He explained financial services of all kinds including banks and insurances still had a low level of penetration in Bulgaria which means people are not used to dealing with financial difficulties.

Marinov said  Doverie had fared “a little bit better than the average” in the UPF  and the third pillar sector and “a little bit worse” in the PPF sector .

“You could say we were a little bit above the average side.”

For the last two years the regulator has reported an average return for all UPF of  -3.98% and -5.51 for the PPF.

Doverie’s CFO explained its funds had lowered the risk in its portfolio continuously over the last year by “lowering exposure to equities and the CEE region”.

“Our bond portfolio now predominantly consists of government debt or AAA-rated bonds,” said Marinov.

“This is a defensive position that we keep and we are watching the market for opportunities to invest but we are not sure yet what is the right move.”

Marinov added Doverie only invested directly in equities in the CEE region while foreign equity exposure is covered by ETFs and mutual funds.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2546

    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
    Size: Total CHF 600m, approx. CHF 100-300m per fund investment.
    Closing date: 2019-06-28.

Begin Your Search Here
<