The investment fund market recorded relatively high growth rates last year, after a several-year cycle of stagnation.

The data of the Financial Supervision Authority (FSA) show that at the end of 2021 the net market assets reached the value of ALL 77 billion or about EUR 615 million. Over the course of a year, the market value of assets expanded by 15.3%.

The growth of the investment fund market seems to have been positively influenced by several factors. The significant improvement of the real economy last year seems to have created a more favorable climate in terms of expanding financial investments. The improvement of returns on investment of funds, especially those in foreign currency, has also had a positive impact. This has made funds more attractive to investors. At the end of 2021, the number of members in investment funds reached more than 40 thousand, with an increase of 22.65% since the beginning of the year.

Also, an impetus for market growth has come from the entry of new actors into the market. In the period 2020-2021, AFSA has licensed six new investment funds. This includes the funds of management companies that have entered the market during the above period, such as Albsig Invest and ABI Invest, but also for new funds of existing actors, such as Raiffeisen Invest and WVP Fund Management Tirana. The main entrepreneurs in the investment fund market in Albania remain banks and insurance companies. Of the eleven currently licensed funds, four are administered by Raiffeisen Invest, three by ABI Invest, one by Credins Invest, two by WVP Fund Management Tirana and one by Albsig Invest.

Even for last year, in volumes, the market was dominated by funds administered by Raiffeisen Invest, with more than 93% of total net market assets. Raiffeisen Prestige Fund in Lek leads with 60.4%, followed by Raiffeisen Vizion with 22.4% and Raiffeisen Invest Euro with 10.4%.

Divided by currency, the vast majority of the market is the assets of lek funds, with about 88% of the total. Lek funds invest members' quotas mainly in Albanian government debt securities, in the absence of other alternatives. This provides a high level of security for members, but on the other hand significantly limits the scope for portfolio diversification and return improvement. In the long run, this can potentially be a factor limiting market growth spaces. Currently, lek investment funds have a similar profile to each other and offer slightly higher returns than bank deposits. Management companies are interested in expanding the spectrum of investments in instruments issued by the private sector.

Assets of foreign currency investment funds at the end of last year accounted for less than 12% of the total. Foreign currency funds have a greater volatility and during the pandemic period have been more sensitive to fluctuations in global markets. After declining in 2020, during 2021 the returns of foreign currency funds returned to the territory of positive growth.

However, most foreign currency assets are invested in bonds of foreign governments and corporations, relatively low risk instruments. Only a very small portion is invested in higher risk instruments, mainly stocks. Currently, the funds partially or fully engaged in equity investing are WVP Top Invest, WVP Global, ABI FLEX EUR and ABI FLEX USD. Taken together, these funds own a total of less than 0.6% of the net market assets.

(Source: Monitor)