With the beginning of January, Czechs have the opportunity to provide for their old age under more favorable conditions. A long-term investment product is one of the ways to achieve this goal. Let’s take a look at what products Czechs most often store in DIP.
A total of 29 companies currently offer the new financial instrument in the Czech Republic. Amundi, Europe’s largest asset manager, recently launched a DIP. It will offer clients several hundred investment instruments, including actively managed funds, index and low-cost funds.
“The long-term investment product is a welcome change that will enable savers to effectively provide for their old age, and will thus suitably complement our portfolio of financial and investment products,” says Roman Pospíšil, Deputy Chairman of the Board of Directors of Amundi Czech Republic.
Patria Finance, the largest domestic securities dealer, also offers investments through DIP for new and existing clients. The head of the investment portal Patria.cz, Josef Němeček, says that clients most often look for exchange-traded funds (ETFs) as part of the Regular Investments product. Specifically, it concerns the S&P 500 and Nasdaq stock indexes and the broader MSCI global index.
Among other favorites, we can also find ETFs focused on one of the main trends of today, i.e. robotics and artificial intelligence, on the front row. “As part of Regular Investments, we now offer 14 of the most sought-after ETFs, but in the very near future we will substantially expand the range,” Němeček claims.
Popular mutual funds
On the contrary, Česká spořitelna sees very little interest in buying ETFs and individual shares within the DIP among its clients, as Ladislav Šlápota from the Wealth Management department of Česká spořitelna reported for SZ Byznys.
“After a few months since its launch, we can see that DIP has caught the attention of clients as a suitable supplement for creating a financial reserve for old age. In general, we see that Spořitelna clients primarily prefer a regular investment in one specific product. Mixed mutual funds are the most popular,” says Šlápota.
Photo: List of News
The state is trying to motivate people to take more care about financial security for retirement. In an effort to make investing more attractive, new legislation came into effect on January 1, 2024.
Another major asset manager, Generali Investments CEE, also offers a long-term investment product. So far, clients mainly choose dynamic funds with a long-term investment horizon and regular investments.
“Specifically, it is mainly the Generali Global Brands Fund, into which a large part of the investments within the DIP goes. After that, the preferences of clients are followed, for example, by Generali Fond pharmaceutics and biotechnology, Generali Corporate Bond Fund or Generali Real Estate Fund,” says Generali Investments CEE financial director Marek Beneš for SZ Byznys.
According to him, it is obvious that DIP brings to invest even those who have not had – at least in the case of this asset manager – direct experience with investment funds. “Almost half of the clients who currently have a Generali DIP are completely new clients for us,” revealed Beneš.
Czechs are hearing about investing in ETFs
According to the financial advisory company Broker Consulting, ETF instruments are generally more in demand among its clients compared to actively managed mutual funds.
“Based on our experience, we can say that the most used are individually compiled investment portfolios of funds and ETF instruments. The most common composition is 60 percent shares, 30 percent bonds, and ten percent alternatives,” Ondřej Frýda, regional manager of Broker Consulting, explains to SZ Byznys.
According to Frýda, however, people should definitely not “describe” each other. “Investment strategy is always based on the investment horizon, risk aversion, overall financial situation and investment experience. With each client, we create a financial plan that takes into account the investment questionnaire, investment experience, current portfolio and the client’s goals,” he adds.
You can also invest in bitcoin via DIP
A number of Czechs also invest through the popular investment platform Porto. Clients here most often choose tailor-made portfolios within the framework of DIP, which are composed of ETFs tracking broad indexes from around the world and are thus globally diversified.
“According to research and our experience, this approach is the best way for long-term, regular investing – perhaps just for retirement, from the point of view of the ratio of return and risk. Apart from the portfolios made by Porta, the custom strategy product is also popular, where investors put together their investment mix themselves. Approximately a quarter of our clients choose this route,” Martin Luňáček, Port’s product director, told SZ Byznys.
According to Luňáček, investing in cryptocurrencies through ETP, which is an investment instrument traded on the stock exchange similar to ETF, has also gained popularity within the DIP. They can also be included in the DIP on the Port.
“It is precisely the bitcoin cryptocurrency instrument that is the fifth most popular that investors include in their investment strategies. Before it, there are only ETFs for well-known indexes such as the American S&P 500, in which investors have the largest volume of funds. But people also have a lot of faith in the clean energy, robotics and cyber security sectors,” adds Luňáček.
Analyst Marcel Vanduch from Partners claims that in the case of this financial consulting company, the DIP solution is mostly part of the broader investment portfolio of individual clients. “We are registering greater interest among today’s generation of thirty-somethings, and these are usually stock solutions that have the most interesting income potential over a very long investment horizon,” says Vanduch for SZ Byznys.
According to the analyst, the creation of the overall investment portfolio is mostly not only about DIP, but if the long-term portfolio should be built only with the vision of ensuring a peaceful financial old age, then the largest part would be an equity fund focusing on shares of large global companies from developed markets.
“A smaller part would then consist of a fund focused on investments in shares of emerging markets, then shares of smaller companies from the point of view of market capitalization, and some sector funds such as healthcare or technology could be a suitable addition,” adds Vanduch.
