Locally managed open-end investment funds in Romania saw net withdrawals of over RON 1.8 billion (EUR 393 million) in the first six months of this year. Their assets thus went down 7.8%, to under RON 21 billion (EUR 4.5 billion) at the end of June.

In June alone, investors pulled out a net amount of RON 577 million (124 million), according to data from the local Fund Managers’ Association – AAF.

Bond and money market funds, which invest mainly in fixed-income instruments and have been more popular in Romania after the financial crisis, were the most affected by recent withdrawals.

The outflows are likely related to the declining yields mutual funds have provided this year, according to AAF executive director Jan Pricop.

“Those who had maybe different expectations or maybe didn’t understand the products very well were unhappy with the recent evolution of yields, which is reversely correlated to the interest rates. When interest rates increase, bond prices go down and the funds’ yields become less motivating for their investors,” Pricop explained.

He added that some of the money that went out of these funds probably went back into bank deposits.

editor@romania-insider.com