Predrag Milosevic, director of Ilirika DZU - We are ready to negotiate acquisition of other funds as well

(Predrag Milosevic)

Situation in the investment funds market is a bit better than in previous years, but it is still underdeveloped because it reflects the situation in the capital market. Main reasons for this include the lack of quality securities, insufficient liquidity in the market and, especially, low level of awareness of the investment funds industry as an alternative way to save money, Predrag Milosevic, the director of the fund management company Ilirika Drustvo za Upravljanje Fondovima (Ilirika DZU).

Ilirika operates in the investment funds market in Serbia for as many as eight years now. Today it manages five investment funds, which makes it a leader in the market in terms of both number of investment funds under its management and the diversity of investment options offered to clients.

eKapija: Are investors today interested in investing in funds?

- Investment in funds reflects the state of our economy. Funds accummulate the surplus of available funds of citizens and the economy for the purpose of investing them in various securities and deposits in order to generate a higher yield on investment for their investors than a bank does. The interest of investors is on a rise today, primarily in cash funds, because of a drop in interest rates on savings accounts. However, investing in funds is not so much covered by the media, so there's still a barrier and unjustified lack of trust in funds, considering that this is an exceptionally organized segment of finance.

eKapija: What is the situation with the outflow of investors? How much money has been drained from funds?

- Money was withdrawn mainly by investors in equity funds who were the most numerous when the development of the investment funds industry began. These funds also suffered the biggest losses and drops in the value of investment units because our capital market has not yet recovered when compared to the state in 2007, and the prices of the most liquid domestic shares currently equal 30-40% of the value they had eight years ago. The outflow of clients today is at a level of operating business.

eKapija: What are your expectations for the future of the investment funds industry in Serbia?

- The future of the investment funds industry is tied to the future of the capital market in Serbia. With a higher level of development, we can expect even bigger interest of investors in investing in balanced or even equity funds. For example, now is a favorable moment to invest in cash funds which are the most secure and the least risky funds when it comes to the type of investment.

eKapija: Tell us Ilirika's plans for the following period? Is there a possibility of you taking over another fund?

- Ilirika took over several funds from other fund management companies in the previous period, which shows our commitment and faith in the future of this industry in Serbia. Since it takes to reach an agreement, we are ready to continue to negotiate acquisitions with other companies.

eKapija: Are you satisfied with the legislation?

- Legislation is good, but there's always room for improvement, especially when it comes to the evaluation of certain debt instruments, as well as for the optimization of reporting.

eKapija: How would you assess the position of funds and the industry in our country when compared to the position of funds elsewhere in the region? It seems that we still lag behind Slovenia and Croatia.

- Yes, the investment funds industry in these countries is better than ours because they both started establishing funds before us and enjoyed media support, and there is also the fact that average salary in these countries is much above the average wage in Serbia.

eKapija: What is the capital of funds that are managed by Ilirika?

- Ilirika manages two cash funds (Dinar and Euro) which exclusively invest in the debt instruments of the Republic of Serbia and time deposits with banks. These funds will never invest in shares. Then we have a balanced fund that represents a combination of debt instruments and shares of world-renowned companies as well as two value funds, that is, equity funds which invest in company shares.

A total value of capital of our funds is currently at about RSD 570 million.

eKapija: What would you recommend to prospective small investors? Should they invest at all, in what way and in which funds?

- It is definitely recommended for investors to invest a surplus of their money in investment funds because they are regulated by law and diversify the funds under their management, meaning that the risk of drop in value is minimized. Funds are managed by professionals who have enough knowledge and experience to make the most optimal investment decision. Funds always bring higher yields than classical savings, costs of investing are smaller than the costs incurred by an individual and, the most importantly, investment funds allow investors to cash their assets much faster.

(Photo: stockernumber2/shutterstock.com)

eKapija: Is there any specific industry that, in your opinion, ensures the highest yields on investment?

- Ilirika does not invest in one industry only. Our investment decisions always depend on the results of analysis. Of course, food production and software companies definitely have the best long term prospects in the capital market.

eKapija: How much your investment plans depend on government securities and investments in corporate shares?

- A quality market material is a precondition for the development of investment funds. Financial instruments of the Government and equity securities are equally important to us, but I must point out that the funds managed by Ilirika invest only a small percentage of capital in domestic shares and that we are mainly focused on foreign markets.

eKapija: One can often hear that investing in investment funds brings more profite than savings. Is that really true?

- I must underline these are not rumors but the fact - investing in investment funds is more profitable. In favor of this are the statistics and publicly available data on our website www.ilirika.rs.