Investment funds and asset management market in Poland, 2014

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Poland's asset management industry saw stable growth across all but one segment in H1 2014. Assets of regulated investment funds and assets in voluntary pension plans - pillar III kept growing quickly and reached PLN 203 billion and PLN 15 billion, respectively. Also managed funds* of insurance companies showed positive development climbing to PLN 152 billion, as of H1 2014. In contrast, Pillar II assets plunged by nearly 50% to PLN 152 billion as the overhaul of the second-pillar pension system, in early 2014, resulted in a forced transfer of roughly half of segment's assets to the state-run social security institution. As a consequence, despite positive developments in most segments, the total value of assets under management (AuM) in Poland contracted to PLN 522 billion (� 124 billion) in H1 2014. Three large firms: PZU, Aviva and ING remained the key asset managers in the country with a combined value of AuM of over PLN 200 billion. However, most of major asset managers continued to lose market share in favor of smaller and more flexible specialists, growing quickly in market niches. OutlookThe asset management industry in Poland is expected to sustain a moderate growth of ~7% p.a. by 2016. New inflows from individual clients will fuel investment fund assets, unit-linked insurance and Pillar III pension plans. One of factors supporting new investments will be exceptionally low market interest rates which are backing up the process of bank deposits conversion. However, the most important growth factor will be constantly increasing wealth of individuals, which has persisted for over 10 last years. The institutional part of asset management business is also likely to expand in the future although at slower rates than the retail segment. As far as the profitability of asset managers is concerned, Inteliace Research expects that the pressure on margins will intensify inline with the growing number of competing asset managers operating in the market, which eventually will lead to market consolidation around the most efficient players. * Technical reserves of non-life and life insurers, including unit-linked life funds.