Investin appetite is big, stock funds are on the course

Most of the conservative investments did not pay much for me today. In the case of mutual funds, this may be different. That is, if you are willing to look for a dynamite strategy. In this way, we take the same risk, which can be minimized while maintaining certain rules.

Assets in mutual funds increased by approximately 8.2 billion crowns during the second quarter of 2018. In total, the population and institutions of domestic and foreign mutual funds offered in the Czech Republic have 488 billion crowns. Only 18 percent of this amount is generated by the first persons. The rest, 82 percent, does not fall on individuals.


Data for the second quarter confirmed that the investment appetite among people remains high despite its stability in the financial markets. In the past, he has heard much more than in the past about being able to co-own large companies through a mutual fund, states Pavel Hoffman, only from the Executive Board of the Capital Market Association (AKAT).


According to him, there have been mainly equity funds in the exchange rate lately. In the middle of this year, they had investments of more than 105 billion crowns, which is 4.8 percent more than in the first quarter.

The most action

The first thing to invest in the event is the most profitable. In the long run, the return on dynamic investments can be expected to be between 6 and 8 percent a year, confirms Luk Urbnek, a financial advisor from Partners.

The diversity of financial markets and every offer of mutual funds is such that every investor can easily choose the investment asset with which he is best connected. In the market we will find both mutual funds, focusing on specific regions, such as Europe, Asia and the USA, and long sectors, such as energy, information technology or you, telecommunications, to Vlastimil Kuera, manager of investment products Renomia Benefit.

The investor can choose whether he wants to invest in stocks that are grouped for dividends, the opportunity to decide whether he will want to choose only the largest and most profitable companies on the market (so-called blue chips), or will invest his resources in developing countries (so-called emerging markets), the fall into companies with small capitalization (so-called small caps) and add darkness to its portfolio in the face of speculation.

It would not be best to choose only one country and sector. The risk is for you to allocate, ie diversify. It is important to divide investments geographically and sectors, describes Urbnek. The basis of investment should be the securities of developed markets and economies. Emerging markets such as Brazil, Russia, India or the other, then recommend to include in the portfolio of margins.

High input = risk

Even so, the risk of investing in the action is the highest. Equities are generally far more prone to market sentiment and economic cycles, explains Luk Kovanda, chief economist at the Czech Fund. In other words, from day to day you can drink a lot of your input. After such a drop, it is then necessary to have a long time to re-align the scraper. Due to these volatility, you need to deal with investments in equity funds with a long time horizon, at least five years, or ten years.

As a result, stocks only make sense if you don’t need pensions for long, and if you can keep your nerves in check. You are just going through some fluctuations in the markets. Throughout 2018, markets are sharply fluctuating in 2017. The situation will be similar in 2019. The competitiveness will increase, predicts Luk Kovanda. The idyll in the financial markets has just ended, and it is questionable whether the end of such a decade of boom will not occur in five years.

Golden Stedn Road

If you do not have the risk for such a risk, or do not consider a really long investment horizon, it may be a good choice to invest in a mutual fund. They share their portfolio between stocks and bonds, in varying proportions depending on the current situation on the financial markets. Vocation represents a greater degree of aggression in times of economic growth and, conversely, a bond represents a defensive approach, Kovanda describes. The exchange of funds thus represents the possibility of sunshine with an acceptable level of risk.

It is therefore not surprising that first-time funds are a long-term favorite among investors and have the most income in them. As of June 30, 2018, it was more than 196 billion crowns.

A variant is thus funds fund, ie investment funds, which hold other funds in their portfolio. As a result, there is a very wide diversification of risk.

Only some bonds issue bonds

And then there are the funds that buy bonds. These generally fall under conservative investments. But in fact it doesn’t have to be that bad. Wrong about how to choose the type of bond. The valuation of government bonds of the most developed economies can be expected to be around one percent, high-quality corporate bonds can increase the value of invested securities by around two percent, to Kuera.

And then there are the so-called High Yield bonds, which can provide valued around percent. For these, however, it is necessary to take into account the high risk, because there is a probability of insolvency.

The so-called rating is used to orientate what is about risk. The first shows the probability with which the issuer of the bond will be able to meet its obligations, Urbnek points out. The best rating is AAA, the worst D.

Usually, bond funds do not buy just one type of bond. Bn is a mix of government and corporate bonds. The input is then around the percentage. With just those bonds, you wouldn’t even beat inflation. As for the investment horizon, travel at least three years, but go fast with five.

Money market funds are the jumper of the year

Among conservative investments, apart from bonds, there are money market funds, which have won virtually nothing in recent years, and investors have had virtually no income. Now the card turns slowly.

In the second quarter, they recorded the biggest comeback. The growth of years of rates moving these funds upwards, Pavel Hoffman points out, the main reason that investors asked money market funds back. While at the end of the first quarter of this year, investors in them had about 2.96 billion crowns, at the end of the second quarter it was almost 5.2 billion crowns. In other words, the quarterly change in this case represents a number of more than 75 percent. But even so, they are currently not represented on the Czech market.

In general, they have little input in connection with the fact that money market funds invest funds in short-term investment instruments. Most of them are deposits, bills, treasury bills and bonds with a very short maturity, a maximum of one year, to Kuera. Adding to the fact that at a time when rates are still on the market for very short years (even a little outside), the annual return on this type of mutual fund is around one percent. Money market funds are thus intended primarily for those investors who have no experience with investing and prefer a safe return and look for an appreciation of financial resources in the time horizon of one and two years.

How and how much to invest in the fund

In addition to investing strategy, you need to choose the way you invest. You have to offer more. Go to a bank, to one of the investment intermediaries or to securities dealers, who often also mediate the funds of some banks. And if you decide for any variant, you should always be assisted by a real expert who will explain the nature of investment tools, services, related risks and also ensure quality and long-term service.

Then you just have to determine the amount you want to invest. Don’t worry, you don’t have millions, hundreds or even tens of thousands. One-off can be invested in mutual funds from CZK 10,000, and regularly from CZK 500 per month. Even with such a low but regular monthly payment, an interesting asset can be created in the future. In addition, with a regular investment, you buy a specific investment tool at a constant market price, so long-term fluctuations in the investment do not have to worry you much. This is what all the people are aware of.

The development in the second quarter also confirms the gradual increase in the share of investments in mutual funds in the total assets of households. And the current trend is everywhere and according to regular investments in new media, confirms Martin ez, chairman of AKAT.

Fees associated with investments in mutual funds

For mutual funds, we most often encounter sets of fee types. But not all of them as a reln client will see.

  • Admission fees are factories when buying mutual funds. They depend on the type of mutual fund. It most often ranges between 0.1 and 5.0% of the investment. It has a dynamic type of mutual fund, so you usually have an entry fee, which is associated with the need for active management of the specific product.
  • Management fee it is displayed in the current range and is read in the current, before the given frequency. On the Internet and in the inscriptions, the client is given a certain price of the mutual fund, including this cost. Its range ranges from 0.5 to 2.5% depending on the type of investment product.
  • Entrance fee is required only for special types of mutual funds in the repurchased volume of assets. It is a cost for non-compliance with the conditions of the fund and its size is different, most often between 1 and 2%.