ASSETS OF REAL ESTATE FUNDS GROW YEAR-ON-YEAR AND ALSO COMPARED TO THE PREVIOUS QUARTER
Real estate funds belong to the group of mutual funds, which are a tool for long-term collective investment. Investing in such funds takes place through management companies. Through real estate funds, investors buy shares in administrative buildings, shopping centers, residential real estate or logistics and industrial parks and de facto become their co-owners. Capital is required from the investor, the management company will take care of the property management. Such investment is characterized by income from rents and an increase in the market value of real estate, and is also an alternative to the more time- and administratively demanding investment in the purchase of so-called investment apartment.

Národná banka Slovenska (NBS) distinguishes mutual funds according to investment strategy into bond, stock, mixed, real estate and others. As of March 31, 2024, the total financial value of the assets of investment mutual funds was 10,225.8 million. EUR and exceeded the level of 10 billion for the first time. euro On a year-on-year basis, a volume increase of 10.5% was recorded. Compared to the previous quarter, there was an increase of 4.9% (in both cases due to the increase in the volume of assets of stock, bond and real estate funds).

As of March 31, 2024, mixed funds continued to have the largest share of the total assets of mutual funds with a share of 36.6%. However, the reduction of their share cannot be overlooked (at the end of 2021, the share was 50%). On the contrary, the share of real estate and equity funds has grown in recent years. It is currently 25.4% for real estate funds and 23.1% for equity funds. Bond funds accounted for 14.7% of total assets, other funds accounted for 0.2% at the end of the first quarter of 2024.

ASSETS OF REAL ESTATE FUNDS AT THE END OF MARCH 2024 WITH A VOLUME CLOSE TO EUR 2.6 BILLION
According to the most recent NBS data, as of March 31, 2024, the financial value of the assets of real estate funds was 2,598.9 million. euros and it is also the historically highest value of the volume of their assets. Compared to the same period in 2023, there was an increase of 3.7%. Compared to the end of the previous quarter, an increase of 1.4% was recorded.

HOW ARE REAL ESTATE FUNDS IN THE CZECH REPUBLIC?
In our regular review, we also pay attention to the quarterly development of real estate funds in the Czech Republic. Many investors from Slovakia are looking for investment opportunities there as well - including real estate funds of retail and qualified investors. Even in the Czech Republic, real estate funds are among the preferred investment instruments of investors.

As of March 31, 2024, the assets of real estate funds in the Czech Republic were at the level of 250.1 billion. CZK (9.885 billion euros) and their share in the total assets of mutual funds was 18.1%. Year-on-year, there was an increase in the volume of assets by 15.4%, compared to the previous quarter, an increase of 5.5% was recorded. It emerged from the current data of the Czech National Bank (ČNB).

FROM A LONG-TERM PERSPECTIVE, REAL ESTATE FUNDS BEAT INFLATION AND ARE AMONG THE MOST PROFITABLE
In the long term, the returns of real estate funds are above the level of inflation. While, for example, from the beginning of 2017 to the end of 2021 (in 5 years), the prices of goods and services increased by more than 15%, the cumulative yield of real estate funds reached almost 20%. It emerged from the Slovak investor index (ISI100). It is made up of the hundred largest mutual funds that are members of the Slovak Association of Management Companies (SASS). War aggression in Ukraine during 2022 affected the development of financial markets. The profitability of most types of mutual funds in two years (that is, from the beginning of 2022 to the end of 2023) decreased. However, real estate funds continued to appreciate by 8.3%, which resulted from the aforementioned Slovak investor index (ISI100). These data also correspond to the opinions of investment experts, according to which real estate funds are considered a suitable tool for protection against inflation in the long term, or for the so-called investment anchor of the portfolio. According to the creditworthiness and experience of the investor, the funds are intended for retail (ordinary) or qualified investors. In the case of funds of qualified investors, their managers have more flexibility, which makes it possible to achieve higher returns. Therefore, some real estate funds of qualified investors achieve returns of more than 8% per year.

Source: Wood & Company, a.s.