InterCapital Asset Management, the biggest independent asset manager in Croatia with EUR 500 million assets under management and 15 years of experience in Romania, recently launched its ETF that replicates BET-TRN, the total net return version of the Bucharest Stock Exchange’s BET index. This is the first foreign-managed ETF listed in Romania.
The new ETF, already tradeable on BVB under the ticker ICBETNETF, aims to grant Romanian companies better access to liquidity and allow retail and institutional investors to invest in the local companies. Initially, the ETF was tradeable only on the Croatian and Slovenian stock exchanges. The BET-TRN index was launched in October 2021 and has grown by 61% since.
“Why buy S&P when you have BET?” asked Ivan Kurtovic, InterCapital Asset Management. Kurtovic highlighted the challenges retail investors face in accessing foreign markets, stating that it is difficult and expensive to do so without ETFs. He further revealed that the BET-TRN AUM currently stands at EUR 10 million, with approximately 600 investors, primarily local retail investors from Croatia and Slovenia, as well as some institutional investors.
According to Divo Pulitika, fund manager at InterCapital, ETFs have become the preferred way to invest worldwide. Nevertheless, they represent only 2% of the total equity in Romania, whereas in the United States, they represent 28%. Croatia, which was at 0% in 2020, is currently at 7%.
The new ETF consists of Romania’s 20 largest public companies, with around 55% of equity invested in the energy sector. A further 29% is in banks, while the remaining 16% is in the so-called entrepreneurial businesses. Pulitika also noted that Romania offers many investment opportunities, with the BET index trading at a P/E (price to earnings ratio) of 9, compared to the NASDAQ’s 31.8, or the European average of 14-15. The BET’s 5.7% average dividend yield also places it at the forefront in Europe.
The BET index has gained 45% in the last 12 months – the third-best performance in Europe – while the BET-TR index, which also factors in the dividends paid by BET companies, has increased by 54% over the same period. For comparison, the US S&P 500 index has risen by 26%, and the European STOXX 50 index has gained 16% over the same period.
The new ETF is a perfect long-term way for new investors to gain exposure to the market, according to Mihaela Biciu, CEO of Investimental, the newest brokerage firm in Romania. Investimental has partnered with InterCapital, offering retail investors lower fees when they purchase the new ETF, making it the cheapest way to invest in BVB, according to Biciu.
In turn, Adrian Tanase, CEO of the Bucharest Stock Exchange, argued that the ETF is also a financial product worthy of those with experience on the market. “Beating the market is for specialists, for those who are very active,” he added. Tanase also said that InterCapital’s ETF creates a benchmark, like the Fidelis bonds in the bond market, through which investors can measure other stocks.
InterCapital offers a 0% management fee for the ETF until July 31 to draw investors. After the BVB listing, the company aims to list the new ETF on various apps, such as Revolut, which will likely bring more retail investors on board. The company also wants to list one or two more products in the region by year-end, one being a bond-fixed ETF that will be first available in Croatia.
The Croatian financial market benefits from the presence of more developed, older pension funds, whose finances represent an opportunity for Romanian listed companies, InterCapital representatives said. The broker also plans to organize a Romanian Market Days event in Zagreb to promote Romanian companies on the BVB to the Croatian market.
(Photo source: Bursa de Valori Bucuresti on Facebook)
