Friday, December 6 2013 10:11
Introduction of compulsory accumulative pension funds will foster development of financial market infrastructures in Armenia
ArmInfo. Introduction of the compulsory accumulative pension funds in Armenia will foster development of the financial and equity market infrastructures, says Armen Vardanyan, Executive Officer of C-QUADRAT Ampega Asset Management Armenia. The company has recently received the Armenian CB's license for management of assets of pension funds.
Speaking in a joint press conference with some top-managers of C-QUADRAT Ampega Asset Management Armenia shareholder-companies (Talanx Asset Management, Germany, and C-QUADRAT Investment, Austria) at the Central Bank of Armenia, Vardanyan said that the major task for the managing company will be preservation and increase of the citizens pension savings through a conservative, accurate and low-risk system of pension assets management.
He said that the company is ready to offer three investment strategies: investments in the pension fund with sustainable profits, investment in the conservative pension funds, and investments in the balanced pension fund. A customer is free to chose between the given three systems and transfer from one to another once in a year free of charge. In particular, the pension fund with sustainable income implies investments of the 100% package of a customer in the debt obligations with fixed yield (government bonds and deposits of highly reliable banks) to avoid risks. The conservative funds implies investment of 75% of a customer package in the debt obligations with fixed yield and the remaining 25% in equity securities (shares). Unlike the first two funds, the balanced fund implies equal distribution of funds (50%/50%) in the debt obligations with fixed yield and shares where a beneficiary must know about the risk connected with fall of stock prices depending on the market condition and the state of the emitter-company. As the company's leadership says, in the first 2 years of its activity the company will be managing the pension savings entrusted to it by investing them in highly reliable securities with fixed yield. In conformity with the law, 60% of these securities will be placed in the domestic market, with the remaining 40% to be placed abroad.
At the same time, those present agreed with ArmInfo's correspondent saying that the country needs investment instruments, as there are just government securities and deposits of some reliable banks in the country, which gives little opportunities for diversification of investment portfolios. Although most of emitters of securities in Armenia lack high investments ratings, Vardanyan said, the company will be assessing the reliability of securities independently.
"Criteria of activities in the international and local markets differ. We will be investing in securities with high investment rating abroad. Since we are an Armenian company that seeks to develop the Armenian market, we will develop our own national criteria of risk assessment for the local market. In other words, we are ready to undertake the risks of the local emitters to expand the investment field," Vardanyan said and added that these are far-going plans. He said that company will be selecting emitters not for their investment ratings, like it is done abroad, but through independent assessment of their reliability. There are already companies that entered the equity market with their debt obligations and have been quite successfully placing them in the local market, Vardanyan said. According to him, in the mid-term outlook, simultaneously with the market development, the company will make efforts to develop the necessary instruments and may even initiate mutual funds. Vardanyan said that the company will gradually offer its services to the citizens who are ready to participate in the voluntary accumulative system. Those present agreed that besides management risks, of C-QUADRAT Ampega Asset Management Armenia may face also currency risks, as up to 40% of the funds will be placed in foreign assets. In this light, at the company they are sure that the financial market is low volatile and the key world currencies will appreciate against the Armenian dram. The company's specialists say that competent diversification of the foreign investment basket will make it possible to avoid currency risks.
"C-QUADRAT Ampega Asset Management Armenia" was set up in October 2013 as a joint venture of German Talanx Asset Management and Austrian C-QUADRAT. 74.9% shares of "C-QUADRAT Ampega Asset Management Armenia" is owned by C-QUADRAT Investment. C-QUADRAT Investment was established in 1991. It has been listed in the Prime Standard of the Frankfurt stock exchange since 2006 and since May 2008 on the Vienna stock exchange. With offices in Vienna, London, Frankfurt and Geneva and sales activities in 17 countries, C-QUADRAT is active throughout Europe. To recall, the voluntary accumulative pension system was introduced in Armenia on Jan 1 2011. The system will become compulsory starting Jan 1 2014. According to the bill, the minimal pension in the country will be equal to the minimum wage, while the basic pension will total 150% of the minimum wage. The compulsory accumulative pension system will apply to the citizens born after Jan 1 1974 (the citizens below 40). Starting Jan 1 2014, 5% of their salaries will be transferred to their personal accumulative accounts. The government will transfer a similar amount (but no more than 25,000 drams). The first registered manager of the voluntary pension funds in Armenia id Capital Asset Management CJSC (CB's licese dated 18 Oct 2012). Making strict requirements to the managing companies of the compulsory accumulative pension funds, the CB registered two big professional market participants with European capital in Nov 2013: C-QUADRAT Ampega Asset Management Armenia (Nov 29) and Amindi-ACBA- Asset-Management, France. The CB licensed these companies for management of pension funds.
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