Russian aggression against Ukraine intensified the wave of risk aversion that had been building up for some time. Significant discounts continued and affected all asset classes, especially instruments of Russian entities. The market had already been under pressure for some time and the materialisation of the negative scenario pushed it towards new short-term minima.
Our exposure to Russian assets is not significant, apart from the sub-fund Generali Obligacje: New Europe, however the scale of the discount will materially affect the sub-funds' performance. We have exposure to corporate debt, to five entities. 4 of them are investment grade and in our view solvent entities. The exposure to CIS countries, which is shown in the composition of the subfunds' portfolios published as at 30.12.2021, has been consistently reduced as the strength of geopolitical risk factors in the region increases.
The only equity fund in our range that has this exposure is the Generali Akcje sub-fund: New Europe. Exposure to these markets results directly from the subfund's investment policy, which is based on investments in the CEE + CIS region. The remaining equity subfunds do not have any exposure to Russian or CIS issuers.
Previous events of a similar nature
Historical analysis indicates that when armed conflicts occur, stock markets tend to build up extreme pessimism very quickly. They then return to normalcy relatively quickly and recover their losses dynamically. The reactions of the US stock market over the years show this particularly clearly.
Outlook for the future
In the current geopolitical environment, we estimate that the Generali Gold, Generali Oszczędnościowy and SGB Bankowy sub-funds will be least negatively affected by current events. We are keeping a close eye on the situation, especially the reactions in terms of sanctions. We will update the above information as the situation develops.
Generali Investments TFI S.A. (“Investment Fund Company”) operates under decision no. KPW-4073-1\95 of the Securities and Exchange Commission (currently: Polish Financial Supervision Authority) of 1 June 1995 and provides agency services in respect of sale and repurchase of fund units.
This material represents a comment on the current market situation. Information contained in this material does not represent: investment advisory service or recommendation on financial instruments nor does it represent information recommending or suggesting an investment strategy or an investment recommendation described in Article 3(1)(34) and (35) of the Regulation (EU) No 596/2014 of the European Parliament and of the Council on market abuse. This material is not an information document required under the law.
This document has been prepared with due diligence and using best available knowledge as at 24.02.2022 at 11.00 a.m. Information presented and described herein is based on the author’s opinion as at the time this document was prepared and on then applicable economic, geopolitical and legal situation as well as tax laws; amendments hereto do not require previous notification. The Investment Fund Company assumes no liability for the adverse effects that the direct or indirect use of the content hereof might have. The results obtained will differ depending on the market situation and on the period for which the investment is held.
Neither the Investment Fund Company nor the investment funds guarantee that investment targets will be met. Participants need to be prepared for a possible decrease in or a loss of the funds invested. Handling fees and due taxes might be deducted from the results. Taxation depends on the client’s situation and it may change in the future. Historical results are not a forecast of future returns.
This document does not contain full information necessary to assess the risk related to investing in investment funds. Investment decisions should be made only after reading the Prospectus that includes detailed information on: investment policy, risk factors, principles of sales of fund units, table of handling fees and tax information as well as Key investor information and information for clients of AFI available at www.generali-investments.pl. Documents are drawn up in the Polish language.
High volatility of the net asset value of: Generali Akcje Małych i Średnich Spółek, Generali Akcje Wzrostu, Generali Akcje: Nowa Europa, Generali Korona Akcje, Generali Korona Zrównoważony, Generali Stabilny Wzrost, Generali Obligacje: Nowa Europa, Generali Akcje: Turcja, Generali Akcji: Megatrendy in Generali Fundusze FIO and Generali Obligacje Aktywny, Generali Obligacje Globalne Rynki Wschodzące, Generali Złota, Generali Euro, Generali Akcji Amerykańskich, Generali Akcji Europejskich, Generali Akcji Ekologicznych in Generali Fundusze SFIO.
There is a possibility to invest more than 35% of asset value of Generali Korona Dochodowy, Generali Akcji: Megatrendy, Generali Korona Obligacje, Generali Stabilny Wzrost, Generali Korona Zrównoważony, Generali Złota, Generali Aktywny Dochodowy, SGB Dłużny, Generali Akcji Europejskich, Generali Akcji Amerykańskich in securities issued, backed or guaranteed by the Polish Treasury or the National Bank of Poland, and in the case of Generali Dolar, Generali Obligacje: Nowa Europa, Generali Akcje: Turcja, Generali Akcji: Megatrendy and Generali Oszczędnościowy also in securities issued, backed or guaranteed by: Australia, Austria, Belgium, Bulgaria, Canada, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Great Britain, Greece, Hungary, Ireland, Iceland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, United States of America, and the European Investment Bank and the World Bank (The International Bank for Reconstruction and Development).
Generali Złota Sub-fund is characterised by high investment risk and is addressed to investors who have a long-term investment horizon (at least 5 years).
The Investment Fund Company is the sole owner of any copyrights hereto. This document, or any part of the same, may not be copied, published or disseminated in any other manner whatsoever without approval of the Investment Fund Company.