Albanian Investment Funds Continue Recovery, Posting 23% Year-Over-Year Growth in NAV by End-March

The investment funds market has seen a steady recovery in the first quarter of this year, with net assets reaching ALL 51.7 billion. This marks a 2.8% increase from the end of last year and a significant 23% rise compared to the same period the previous year, according to data from the Financial Supervision Authority (AMF). Despite this growth, the asset values remain below the historical peak of nearly ALL 82 billion achieved in 2021.

In 2022, the investment funds market suffered due to the rapid rise in interest rates and financial market yields, which led to a devaluation of securities portfolios, reduced asset values, and a substantial withdrawal of members from the funds. However, the slowing of interest rate increases in 2023 has helped stabilize asset values. Management companies report that most funds have returned to positive annual returns on investments.

A notable development is the increase in the number of members in these funds, now totaling 33,243. This represents a 3.3% increase since the beginning of 2024 and a 15.5% rise compared to the same period last year, reflecting a gradual recovery in investor confidence after the significant exits in 2022. However, the current number of investors is still below the pre-2022 level of over 40,000.

Investment funds denominated in Lek primarily invest in government bonds and, to a lesser extent, liquid assets like bank accounts. Foreign currency funds have a broader range of investments, though government and corporate debt instruments still dominate. Some funds also invest in equities, but their market presence remains limited.

As of the end of the first quarter of 2024, 14 investment funds were active, managed by five different companies. The market is largely dominated by local currency funds, which constitute nearly 93% of the net asset value in financial instruments. However, the value of foreign currency funds has been negatively impacted by exchange rate fluctuations in the past two years.