Bulgarian Association of Asset Management Companies

Evolution of the Asset Management Industry in Bulgaria

Daniel Ganev,

International Relations, BAAMC

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BAAMC History & Mission

Founded Nov 30, 2004 by 8 asset management companies

Currently 30 members, 4 more candidates on the way..

Key objective - to reinforce high professional standards & ethical norms; to promote investor trust and confidence; to make fund industry popular in

society

Code of Ethics – adopted Sep 2006; entirely based on fundamental principles of EFAMA

Cooperation with all market institutions, local and international organizations

EFAMA membership pending

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Members of the Association:

Аврора Капитал КД Инвестмънтс

Актива Асет Мениджмънт КТБ Асет Мениджмънт

Алфа Асет Мениджмънт ОББ Асет Мениджмънт

Астра Асет Мениджмънт Оверон Финанс

БенчМарк Асет Мениджмънт ПФБК Асет Мениджмънт

Болкан Капитал Мениджмънт Райфайзен Асет Мениджмънт (BG)

Варчев Мениджмънт Къмпани Сентинел Асет Мениджмънт

ДСК Управление на активи Синергон Асет Мениджмънт

Експат Асет Мениджмънт Сомони Асет Мениджмънт

Елана Фонд Мениджмънт Стандарт Асет Мениджмънт

Загора Финакорп Асет Мениджмънт Статус Капитал

Златен Лев Капитал Съединение Асет Мениджмънт

Инвест Фонд Мениджмънт Ти Би Ай Асет Мениджмънт

Капман Асет Мениджмънт ЦКБ Асетс Мениджмънт

Карол Капитал Мениджмънт Юг Маркет Фонд Мениджмънт

Пайъниър Инвестмънтс

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Goals of the Association

To assist, promote and make popular the activities of the asset management companies

To integrate and coordinate the efforts of its members, and to defend their professional interests

To reinforce high standards of professionalism among its members in relation to their activities

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BAAMC Accomplishments

Important legislative changes – amendments of the Law on Public Offering of Securities and respective ordinances, harmonization with EU directives, tax laws, etc.

List of Measures Aimed at Market Stabilization during crisis

Uniform Industry Rules and Methods – Common table with fund quotes, Funds Classification Methodology (based on FEFSI

Rules), Calculation of Funds’ Returns, Portfolio Valuation and Risk Mgt Rules

Cooperation with professional organizations – Association of Inv Intermediaries, Association of Banks, Association of Pension Assurance Companies, Association of Industrial Capital, Association of IR Directors, EFAMA, World Bank

Educational seminars for the public and professional community - Burov Foundation, Plovdiv International Fair, Pension Companies World Forum, FSC

Exam Board

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Bulgarian Fund Industry Facts

39 asset management companies

85 domestic mutual funds (UCITS under art. 1 (2) of Directive 85/611/EEC)

Total domestic industry size ~ BGN 330 mln (EUR 170 mln)

42% in equity funds (down from 60% at the peak), 37% in balanced funds, 13% in money mkt funds (strong demand YTD similar to Western Europe),

9% in bond funds

Current ownership structure of funds: 1/3 households, 1/3 corporate, 1/3 institutional

Foreign funds distributed in Bulgaria – 7 different families

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Bulgarian Funds Statistics

813

39

71

85

0

10

20

30

40

50

60

70

80

90

# funds

2004 2005 2006 2007 2008

Number of Mutual Funds in Bulgaria

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Bulgarian Funds Statistics

Evolution of Bulgarian Mutual Funds Industry

1748

159

452

163

3 4 7

170

0.1% 0.1% 0.1%0.2%

0.5%

1.3%

2.9%

1.0% 1.1%

0

50

100

150

200

250

300

350

400

450

500

2001 2002 2003 2004 2005 2006 2007 2008 2009*

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

FundsAssets(EUR mln)

Funds as% ofHouseholdFin Assets

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The crisis in numbers

2/3 erosion of aggregate funds assets : from EUR 500 mln (Oct’2007 peak) to EUR 170 mln (current low)

Half of decrease due to net redemptions, the other half –stocks’ depreciation

Bad news catastrophic 2008 - funds shed a quarter of a billion EUR

Good news we survived!

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Crisis Measures Undertaken

Regulator frequent communication with fund managers, statistics gathering and analysis, flexible approach and understanding

BAAMC regular meetings, constant communication & discussions on possible scenarios, team spirit!

Fund manager risk management, liquidity watch, investor relations, regular updates & info dispatch

No fund ever closed redemptions! no single suspension of exchange trading! no single official investor complaint!

Most actively managed funds performed better than benchmark!

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Expected Development

Expense optimization, structural changes, outsourcing back-office functions

Software upgrades, IT modernization, smaller teams

Greater investor choice, new distribution channels, lower fees

Flight toward index and more passively managed strategies

Lower risk appetite, global bias vs. domestic focus

Custom-tailored products, private banking, discretionary accounts

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BAAMC Contact Info:

Daniel GanevInternational Relations, BAAMCTel: (+359 2) 4008 300E-mail: ganevd@karoll.bg