Investors prefer stock of innovative and commodity companies in June

Jul 15, 2021

The bullish trend was maintained in June, while Russia has been witnessing a higher interest in equity and hybrid investment since early 2021. By the end of the second quarter, stocks of innovative companies like biotech and Russian commodity suppliers emerged on top with the highest yield. Striving to earn a profit, ever more people are looking past savings accounts to favor the higher dividend yield of securities issued by major companies.

In June, Russian investors preferred mutual fund shares in innovative and commodity companies. According to the ranking compiled by InvestFunds, Sber Asset Management’s highest yielding mutual funds were Biotechnology[1], Natural Resources[2] and Dobrynya Nikitich[3]. Dobrynya Nikitich, Natural Resources, and Balanced[4] were among the most popular mutual funds.

Biotechnology

The mutual fund added 7.13% in June to jump to line two by profitability on the InvestFunds ranking. Many investors are currently fixated on the biotech sector due to the deployment of COVID-19 vaccination. Healthcare and biotechnology have proven to be vital in modern society, which certainly affected stock profitability in these sectors.

Furthermore, medications and health products keep seeing a global increase in prices, which drives the proceeds of pharmaceutical companies up. This growth rate is accelerated in Russia on the back of a somewhat weaker ruble and the need to buy drugs and drug substances abroad.

Commodities

The Natural Resources mutual fund appreciated 5.59% in June, while the funds it attracted reached RUB 1 bn. The high yield is due to the bullish trend on the crude market – Brent prices jumped 9.1% reaching a three-year high in June. In general, commodity markets enjoy an upward trend on the back of the reviving economy and people’s higher mobility. In the near future, the demand in this industry is expected to stay high.

Russian stocks

Dobrynya Nikitich appreciated by 5.23%. Not only did it generate solid yield, but it was also ranked among the most popular instruments used by Russian investors. It managed to attract RUB 1.05 in investments.

The mutual fund almost always has a higher profitability than the MOEX index on the five-year horizon and is more attractive in times when the key stock market indexes set new highs.

According to InvestFunds, Balanced maintained its position as a Top 3 most popular mutual fund in Russia. It generates yield by investing in shares and delivers coupon yield by investing in bonds of mostly Russian issuers. In June, it attracted RUB 2.2 bn, which is among the best results on the market.

This fund is focused on more conservative investors interested in having a diversified portfolio. Shareholders are aware that in addition to the bullish trend the credit quality of issuers will be improving and the demand for Russian bonds will be rising as the global economy revives.

Ruble-denominated products look rather promising right now. Take bonds, for instance. They have practically taken their lead from the potential CB rate increase. Given that the regulator started fighting inflation before its foreign counterparts on emerging markets, ruble bonds – especially long-term ones – have a chance to appreciate before this year end. The Central Bank’s more stringent position is having a positive effect on the national currency rate.

Yevgeny Zaitsev

CEO, Sber Asset Management

The text cites data from the InvestFunds ranking of open-end mutual funds with a net asset value starting at RUB 1 bn in terms of yield and investments attracted to open-end and exchange-traded funds between June 1 and 30, 2021.

[1] OPIF RFI Sber – Biotekhnologii (Biotechnology)

[2] OPIF RFI Sber – Prirodniye Resursy (Natural Resources)

[3] OPIF RFI Sber – Fond Aktsiy Dobrynya Nikitich

[4] OPIF RFI Sber – Fond Sbalansirovanny (Balanced)