Tuesday May 24, 2022

Penn funds: no currency risk only

If you want to invest pensions for a short time (around one year or less), I can offer money market funds, which are very suitable for short-term investment. Due to their low volatility, investors are not exposed to the risk of short-term fluctuations and in most cases money market funds are much more suitable than term deposits with the bank.

The only major risk associated with investing in a money market fund, which significantly affects overall returns, is less risk. The unfavorable development of the exchange rate may negatively affect the resulting performance of the fund. Due to the overall low performance of the money market fund, the original conservative fund, which does not invest abroad in the reference currency (the currency in which the investor will state its returns), becomes a mere speculation on the development of the exchange rate.

Domestic investors, for whom the koruna is the reference, should therefore pay attention to which money market fund they are investing in. Otherwise, their conservative investment could not turn into a speculative, high-risk lottery. The situation on our market is such that most managers offering money market funds denominated in crowns hedge all currency risks and it is not necessary to worry about unfavorable developments.

In the day of the second market for money market funds, let’s imagine the remaining seven money market funds available on our market.

Fond Credit Suisse Money Czech Crown Fund, managed by Credit Suisse Asset Management, warns potential investors against the possibility of fluctuations in the value of the share certificate in relation to the exchange rate, which is certainly not positive at first. However, most of the assets in its portfolio are occupied by investments in crowns, and in terms of time, money market instruments dominate with a maturity of less than 6 msc.

He gave two representatives, lic with his investment strategy, offered by Erste Sparinvest. Conservative esk fond pennho trhu buys money market instruments with very low credit risk and a short investment horizon denominated in crowns. The Czech money market fund promises potential returns, as well as low levels of volatility (fluctuating returns). It invests in investment grade bonds issued by the world’s leading companies (banks). All foreign currency investments are hedged against currency risk.

esk fond pennho trhu managed by ING IM invests in quality

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bond with an average maturity of up to 90 days. The bonds are denominated in Czech crowns. The average time to maturity of the fund’s portfolio does not exceed one year.

A similar replacement m such fund MultiCash SOB CZK managed by the Belgian company KBC. It invests in investment grade Eurobonds and money market instruments in Czech crowns, the maximum duration of the portfolio is one year. Investments in foreign currency are secured in Czech crowns.

The penultimate fund in the day-to-day view is HVB money market Plus, managed by Capital Invest. The fund focuses on Czech treasury bills and short-term bonds denominated in crowns, or Eurobonds denominated in euros. Foreign investments are hedged against currency risk.

Fond AAF Czech Interest Growth invests funds exclusively in instruments listed in Czech crowns. The fund is managed by ABN Amro Funds and this sub-fund belongs to the AAF SICAV group.

Money market funds are a suitable alternative to term deposits in the bank, but they are not an ideal tool for investing for more than one year, or for creating long-term reserves. They will definitely find a place in their portfolio and you will have to deal with them in the future as well.

Is it crucial for everyone to secure the fund against the new one? Dark on your nzory.

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