In August, assets of mutual funds slightly dropped but the crowd was far away from panic. The reason for the worse performance of mutual funds certainly was the situation on the global markets, which were affected by the deepening crisis on the US mortgage market. In the upcoming quarter, mutual funds should rebound strongly to recoup the losses from the previous months. The situation of mutual funds is mostly affected by the performance of the Warsaw Stock Exchange since most Poles still invest their savings in stock mutual funds. The value of those should increase in the near future. Mostly, we hope for the improvement of the economic situation on the American market. The federal funds rate cut in the US should lift the housing market from recession. A lower cost of money will allow companies to invest more willingly. Increasing confidence of American investors have a direct effect on Polsig players and that should cause Polish equities to shoot up. Also, a greater activity of Amerivan home developers should keep prices of strategic commodities (copper, zinc, nickel) high so hedging mutual funds (especially those investing in commodities) could be a good investment opportunity in the next quarter.

Along with the improving situation on the equities markets, mutual funds that invest in stocks should be the biggest winners. Alternative investments could include mutual funds investing in commodities, since they can gain either on price increases or decreases. Mutual funds investing in bonds have to the Polish Monetary Policy Council, which can increase interest rates in Poland in the upcoming quarter. Such decision will cause prices of bonds to fall down making those types of mutual funds to lose value. Investors putting their money into mutual funds that invest on the Asian markets have to be careful. The big increases we have seen recently in Shanghai and Hong Kong can end with a big correction movement.

Till the end of the year we should experience increases of the major stock indices. Mutual funds can be a safe investment bringing higher than expected profits.

Adam Narczewski