On December 29, 2020, the Board of the Financial Supervision Authority, reviewed and decided the approval of the adequacy of the activity of the management company “Credins Invest” sh.a., with Decision no. 206, with the requirements of law 56/2020 “On Collective Investment Enterprises”, and bylaws issued in its implementation. Based on the request of the company for expansion of its activity, it was approved by the Financial Supervision Authority with Decision no. 207, dated 29.12.2020, the licensing of Credins Invest as a management company of Alternative Investment Funds, offered only to professional and qualified clients.
The new law on collective investment undertaking, which entered into force on April 2020, created the legal basis for alternative investment funds. Licensing/registration of alternative investment funds constitutes a further diversification of the financial market in Albania, creating opportunities for new investment alternatives only for professional and qualified investors.
The management company “Credins Invest” sh.a. object of activity is the:
December 29, 2020
Dear Investors,
Referring to the difficult situation due to Coronavirus in the territory of the Republic of Albania, and in implementation of the measures taken by the Albanian Government to prevent the spread of Covid-19, Credins Invest sh.a., has created the necessary conditions for the employee safety and continuity of work, regarding the requirements and needs of customers.
We would like to inform you that the activity is being carried out normally, implementing all the necessary measures for the health safety of our employees and clients.
Please for any questions or information you need, contact us in advance at the email address: contact@credinsinvest.com or office number 069 60 60 058. Browse here the yellow protocol for hygiene measures Covid-19 for Banks and Financial Institutions. Check out our official website for updated information.
Thank you for your cooperation.
Credins Invest staff!
November 05, 2020
Dear Investors,
With regard to the difficult situation caused by the Coronavirus within the territory of the Republic of Albania, and in compliance with the measures undertaken by the Albanian Government to prevent the spread of Covid-19, Credins Invest has created the necessary conditions to guarantee employees’ safety and work continuity. As for the requirements and needs of customers, we would like to inform you that the activity is being carried out normally, implementing all the necessary measures for the health safety of our employees and customers.
Please for any questions or further information, contact us in advance at the email address: contact@credinsinvest.com or at the contact number 069 60 60 058.
Browse here the yellow protocol for hygiene measures of Covid-19 for Banks and Financial Institutions.
Check out our official website for updated information.
Thank you for your cooperation.
Credins Invest staff!
We often tend to forget that the little things we do today affect our future! Early withdrawal of a private pension (more…)
Monitor magazine has published the interview of the general director of the management company Credins Invest, Estela Koçi. Asked about the situation of the impact of the global pandemic on the economy, she said that the sudden crisis of COVID-19 brought a moment of uncertainty to investors and increased demand to attract savings invested in funds. However, according to her, the market quickly passed this moment and the decline in assets in this period has been limited. She says that, in the future, it will be important for the funds to offer more diversified and sophisticated investment alternatives.
1. How has the investment fund market been affected by the Covid-19 pandemic crisis?
Today, not only Albania but the whole world is facing an unusual situation. This pandemic has been and remains an extraordinary challenge, and for all of us it has been difficult, especially in the beginning. I can proudly say that Credins Invest has managed successfully this crisis, putting health in the first place, but at the same time taking maximum care of our mission, the professional management of the funds that our clients have trusted us. In general, I think that the investment fund market has maintained stability during this crisis in terms of the level of assets under management, as well as the required level of liquidity of funds, their essential quality. Based on the latest data published by the Financial Supervision Authority for the 6-month period closed on 30.06.2020, it is noticed that the market has had a decrease in the net assets value by approximately 2% compared to the end of the year, compared to a 5% increase in the first 6 months of last year. The market has been affected by the crisis, but I think this impact in extreme conditions is not significant. Funds by nature are liquid and volatile, even under normal conditions. But it is understood that the great uncertainty that has accompanied every individual, especially at the beginning of the pandemic, has had its effects which are also reflected in the investments. What we have noticed is that there was uncertainty among investors at the beginning of the pandemic, and some of them decided to withdraw the savings invested in funds. I think it was an impulsive behavior at the beginning of the crisis. Our strongest weapon has been constant information and communication with investors. Our constant advice to investors of the Credins Premium Fund “stay invested and do not be affected by short-term fluctuations”, had more value in these difficult times. However, it is known that it is much easier to adhere to this rule in normal and calm times than in times of crisis and uncertainty. As a result, there were investors who withdrew their savings from the investment fund. On the other hand, individuals were skeptical about new investments of their savings, trying to not invest their money. All these factors have influenced the fund and the market in general, by affecting the growth comparing to the previous years.
2. What was the performance of the net assets value of the funds, from March onwards? Have you had a decrease in the purchase of quotas and / or an increase in their sale by members?
Because of the financial education not only in the previous years but also during 2020, many investors are familiar with the fact that the duration of the investment is more important than the moment of investment, to ensure sustainable profits in the long run. However, some of them find it difficult to stay invested when the fear of uncertainty is generally compounded by the fluctuation of the fund’s performance, as a result of fluctuations in the rates of bonds and bonds issued by the government. The situation created by the spread of the Covid-19 virus impacted the economy in the country, increasing the demand and debt costs for the Albanian Government in the first months of the year. As a result of this, there has been an increase in the volatility of government bond rates during these months. This is another factor that has affected the uncertainty of investors.
Unlike voluntary pension funds, which are long-term investments, the Credins Premium fund as a short-term and medium-term investment is more liquid, and within 7 days clients can withdraw their money. The main challenge during the first months of the pandemic has been the maintenance and improvement of the cooperation with existing clients, as well as the most effective management of the asset portfolio while maintaining the liquidity of the fund at all times. We say with conviction that despite the extraordinary situation, we have managed to keep the portfolio at stable levels, offering continuous orientation to members who have remained loyal to us and showed patience by continuing their investment. These members today express great satisfaction that they have not withdrawn the fund during the pandemic, and are more motivated to continue and increase their investment in the fund.
3. How has the situation affected the average return on investment in your funds?
The assets of the fund are invested in securities issued by the Government of the Republic of Albania. For this reason, the performance of the Fund’s rate of return and the quota price is affected by the volatility of interest rates in Albanian Government securities. In the first months of the pandemic, interest rates in the bond markets showed an upward trend, leading to a decrease in the quota price. These fluctuations have resulted in a decrease in the rate of return for the investor, compared to the historical return of the Fund. During the following months we have had an increase in the net rate of return, as a result of the reduction of interest rates on Government securities, which came as a result of measures taken by the Bank of Albania, reduction of the key interest rate, liquidity injection as well as Eurobond issuance. Because of the investment strategies and policies, the Credins Premium Fund has managed to perform satisfactorily and remain an attractive investment alternative.
4. Have you undertaken significant changes in investment policies since the outbreak of the crisis?
The investment policy of the Credins Premium Fund is presented in the prospectus of the fund, approved by the Financial Supervisory Authority. Investment policy changes do not generally occur, and if they do, they must obtain the consent of the investor and the supervisory authority. The crisis is not a fundamental factor in changing the investment policy. Covid-19 epidemic was not predicted, but it was an alert and constantly prepared us for periods of volatility. Credins Invest’s team has done undertaking tactical strategies to respond in a timely manner to changes in the securities market where the fund is invested, within the framework of the approved investment policy.
It is very important to provide the investor full transparency regarding the performance of the fund and the compliance of the strategy followed with the prospectus and the rules of the fund. Each investor has the opportunity to access the account online, which in terms of social distancing has been necessary. The company has continued to update the website with the necessary information, as it has regularly published funds performance reports.
5. How will this crisis affect the development prospects of the investment fund market in Albania? Can you suggest interventions at the legal and regulatory level that would make the funds a more attractive investment alternative for the Albanian public?
The pandemic situation that still continues to have multidimensional impact and consequences, increases uncertainty about the future and makes almost any kind of prediction and planning impossible. But one thing is for sure, such crises teach humanity that they must definitely think about difficult moments, must save and plan to set aside funds and savings. Investment funds in my perspective, continue to be the future of the financial market. These are products that will be further developed to respond to the growing demands of the public for more flexibility and profitability. In terms of legal framework, a very important step for this market was the adoption of the new law, as well as the expected developments of the capital market. We as a fund management company are looking forward to being able to offer the public more diversified funds, with more sophisticated instruments than government debt securities, and that meet the growing demands of Albanian investors. The role of the Financial Supervisory Authority in the following, to support and incentivize new initiatives in the investment fund market and the capital market is essential.
To read the full interview in Monitor magazine you can click on this link: https://www.monitor.al/amf-duhet-te-mbeshtese-diversifikimin-e-investîmê-te-fondeve/
“Compound interest is the eighth wonder of the world. He who understands wins, he who does not understand loses “– Albert Einstein
What is Compound Interest?
Compound interest is undoubtedly one of the most powerful forces in financial markets. When calculating interest rates on loans, deposits or investments we may be dealing with simple interest or compound interest.
To understand compound interest, we must first clarify the concept of simple interest. Simple interest is calculated only on the principal amount. For example, you invest 1,000,000 Lekë in a bank deposit with an interest 3% per year, for 2 years. What will be the value of your investment after 2 years? The answer is 1,060,000 Lekë and the interest earned will be 60,000 Lekë. The calculation is simple.
In the case of compound interest, the principal in each period is different. The interest earned will be added to the value of the principal. The compound interest is calculated on the principal and on the interest accumulated in the previous periods, so you gain interest upon interest.
In our example, in addition to the principal of 1,000,000 Lekë, the interest earned in the first year of 30,000 Lekë will also earn interest next year. So, how much will your deposit of 1,000,000 Lekë be worth after 2 years with an annual interest rate of 3%? The answer is 1,060,900 Lekë and the interest earned will be 60,900 Lekë.
Key element: Time
The true power of compound interest is best demonstrated in long-term investment periods. Time is in fact the key element that makes compound interest work better. The time when you start investing is more important than the amount of investment and we can show this quite simply by the following illustration:
Investors are generally aware that changes in interest rates affect the value of bonds. How and to what extent the value of a bond or a bond portfolio is affected by falling or rising interest rates can be measured by the Duration indicator, otherwise known as Duration.
Duration is a measure of interest rate risk that takes into account the maturity, coupon, yield and other associated options of the bond. All these factors are synthesized in a single number that shows the sensitivity of the bond value to changes in market interest rates.
When interest rates rise, the value of bonds decreases and vice versa. Generally, the higher the maturity of a bond, the lower the value of the bond when market interest rates rise. If an investor expects interest rates to fall during the period that will hold the bond, a bond with a longer maturity would be more attractive to him because the value of the bond would increase more than comparable bonds with short term maturities, when the reduction of rates was realized.
As the table below shows, the shorter the maturity of a bond, the less volatile the value of the bond is likely to be. For example, a bond with a 1-year maturity would lose only 1% in value if rates increased by 1%. Whereas, a bond with a maturity of 10 years would lose 10% if the rates were to increase by the same percentage of 1%. Conversely, if rates were to fall by 1%, bonds with a longer maturity would earn more, while those with a shorter maturity would earn less.
Although Duration is a very useful analytical tool, it is not a complete indicator of bond risk. For example, maturity does not indicate anything about the credit risk of a bond. This may be particularly important for low-rated securities (such as high-yield bonds), whose value is equally or more sensitive to the issuer ‘s perception of financial stability than to changes in rates market interest.
Another limitation of using maturity when valuing a bond portfolio is that the average maturity of the portfolio may change as bonds within the portfolio mature and interest rates change. On the other hand, if the portfolio manager expects interest rates to rise, he may shorten the average portfolio maturity to minimize the negative effect on the value of the bond portfolio.
Credins Premium Investment Fund invests mainly in bonds and bonds issued and guaranteed by the Albanian Government. The average duration of the Credins Premium Investment Fund at the end of July is 3.53 years. As we explained above, market interest rates have a significant impact on the value of bonds and consequently on the value of the bond portfolio.
For this reason, all economic and political factors that affect interest rates are analyzed, in order to create the most accurate expectations for the performance of interest rates. Based on these expectations, the portfolio management unit builds tactical investment strategies in order to achieve the objective of the fund, maximize revenue while maintaining principal and liquidity.
Although Duration as an indicator has some limitations, it can be an extremely useful tool for bond portfolio building and risk management. When the Portfolio Manager’s interest rate expectations change, he may adjust the average portfolio maturity (by performing bond sale / purchase transactions in the portfolio) to match his forecast. These adjustments can be made to the portfolio as a whole, or to a specific sector within the portfolio. So if the portfolio manager expects interest rates to fall, the average portfolio duration can be extended to get the most out of the rate change.
The investment plan is a periodic investment scheme in the Credins Premium Investment fund. For more information click here.
Individuals invest for many reasons. No matter what your personal financial goals may be, to achieve them, you need to make sure your money is working hard and smart! But with today’s complex global markets and so many investment choices available, it can be hard to decide what is right for you. Understanding some of the basic concepts can help you make more informed investment decisions.
There are different types of investments and each has its own purpose and potential benefits. Let us focus on bonds, as a more tangible investment opportunity by the Albanian investor.
Bonds are a way in which an entity secures money by borrowing from another entity. For example, governments and corporations issue bonds when they need capital resources to finance their activities. These bonds in turn are bought by investors who want to generate income from their funds.
Practically, when investors buy government bonds, they are lending them to the government. In the same way, when investors buy corporate bonds, they are lending money to a company.
The bond pays the bondholder a periodic interest amount otherwise called a coupon. At the end of the life of the bond – called principal maturity – the initial amount invested is paid to the investor.
The government of country X wants to build an infrastructure project that costs 100 million ALL. To raise the money needed, government finance executives decide to issue government bonds. Each bond will be issued with a value of 100 lek – which is called the nominal value of the bond.
The government – or the issuer of the bonds – offers a coupon rate of 1% per year, to be paid every 6 months. The bonds will mature after 2 years, at which time the government will repay the value of 100 lek for each bond-holder.
The answer will depend on your investment goal. Some investors choose bonds for their potential of generating income. Bonds make fixed and periodic payments. You can also choose bonds if you want your investment to grow, given the potential of a bond for positive price revaluation. It is important to remember that, like any investment, there is also the possibility that prices will fall, and there will be a negative revaluation.
Many individuals invest in bonds because the latter offer more stable returns than stocks. In their worst calendar year since 1989, stocks fell 38% while bonds fell less than 3%. Bonds can also help diversify your portfolio. Bonds are often seen as a good complement to stocks because stock and bond prices often move in opposite directions. Diversification can reduce overall risk and help preserve your wealth.
If investing in bonds is right for me, then how can I invest in them?
You can buy bonds individually, but for many individuals and professional investors, an investment fund that invests in bonds is preferable.
In a bond investment fund:
Dear Investors,
In fulfillment of legal obligations deriving from law no. 10197, dated 10.12.2009 “On Voluntary Pension Funds”, as well as the bylaws issued in its implementation, the management company Credins Invest sh.a, has updated the Prospectus of the Pension Fund “Credins Pension”, approved by the Financial Supervision Authority with decision no. 103, on 29.07.2020. We would like to inform you that the historical data of the fund have been updated in Prospekt.
The composition of the governing bodies includes Mrs. Armira Çitozi, in the capacity of Deputy. General Administrator and Member of the Board of Directors. In the section “Risk Identification” are detailed in information and examples some of the risks of the fund. The full prospectus of the Pension Fund is published on our official website: www.credinsinvest.com
Thank you for your cooperation,
Credins Invest