collective investment

Uralsib Management Company intends to convert two interval mutual funds, the net asset value of which is almost 21 billion rubles, into open ones. This is the largest transformation among mutual funds. According to market participants, interval mutual funds have ceased to be competitive and managers are forced to abandon them in order to retain clients and maintain positions in the market.

Deputy General Director of Uralsib Management Company Alexandra Vodovozova told Kommersant yesterday that two interval funds - LUKOIL Fund First and LUKOIL Fund Professional - will be transformed into open ones. As a result, the management company will receive a standard set of open mutual funds - stock funds (LUKOIL Fund One), bonds (LUKOIL Conservative Fund) and mixed investments (LUKOIL Fund Professional). The changes will be sent for registration with the Federal Financial Markets Service after the December interval (December 12-25— Kommersant ). The management company expects that mutual funds will begin operating in open-end fund mode by March 2007.

This will be the largest project of its kind on the collective investment market. Previously, this was done by Aton Management and BrokerCreditService. However, as a result of the transformation of Uralsib mutual funds, a new leader will appear on the open-end fund market. Thus, the value of the net assets of the mutual fund "LUKOIL Fund One" is 19.7 billion rubles, the largest fund "Troika Dialog - Dobrynya Nikitich" is 15.6 billion rubles.

According to market participants, managers are forced to change the structure of interval mutual funds because they cannot withstand competition. According to Andrei Uspensky, CEO of Pioglobal Asset Management, “we are moving towards the fact that all market funds will be open. We are also going to transfer our interval funds to the open category.” Does not exclude the transfer of Interfin Capital Management Company to the category of open mutual funds Interfin Telecom. As managers note, after indicators of profitability and reliability, the main criterion for investors when choosing a mutual fund is the ability to quickly sell shares. Therefore, if the first two indicators are equal, the shareholder will always choose an open-ended fund. According to Kommersant's estimates, based on data from the National League of Managers, as of November 1, 2006, the share of interval funds amounted to just over 41% of the total net asset value of open-ended and interval mutual funds. A year ago they accounted for 56.7% of the market, two years ago their share exceeded 63.8% of this segment. At the same time, interval funds were not inferior to open-end funds in terms of profitability.

“The advantages of interval funds are outweighed by the ability to quickly enter and exit the fund,” said Vadim Soskov, vice-president of Aton. According to the managing director of BrokerCreditService Management Company Mikhail Semenov, “if at the beginning of the formation of mutual funds everyone sought to optimize their work and the quarterly interval was acceptable, then in the conditions of growing competition, clients demand greater efficiency from funds.” As Alexandra Vodovozova notes, “there is an opportunity to purchase shares on the secondary market, but during peak demand it is difficult to satisfy.”

However, not all managers are committed to converting Russian interval funds to open ones. According to Andrey Zvezdochkin, vice-president of Troika Dialog Management Company, over the past year and a half, his company, on the contrary, has formed five interval funds: “Open funds provide the main flow of clients. Interval funds are of interest to more advanced investors. But if Uralsib Management Company manages to implement decision, this will be a significant event for the market." The head of the development department of Interfin Capital Management Company, Evgeniy Fazleev, agrees with him: “There are many interesting securities that, due to low liquidity, can only be included in interval funds. Therefore, it is not yet possible to transfer all of them to open ones.”

Sergey Kommersant-Tyagay, Alexey Kommersant-Lampsi

Uralsib opens mutual funds