Assets Held by Investment Funds Reach $21.4 Billion

The inflow took the total value of assets held by investment funds to 5,137 trillion rials ($21.4 billion), according to Fatemeh Pezeshk-Zadeh, the Securities and Exchange News Agency reported. 

Fixed income funds have the lion’s share of the assets, holding 3,658 trillion rials ($15.4b) in their portfolios. Funds operated by market making companies manage 871 trillion rials ($3.6b) and equity funds 563 trillion rials ($2.3b).

Market makers essentially act as wholesalers by buying and selling securities to balance the market and help keep the market functioning. Market making operation gained traction after the domestic equity market took a drubbing under a prolonged sell-off last summer. 

Assets worth 28 trillion rials are owned by mutual funds and commodity-based funds hold 14 trillion rials in assets. 

A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt.

Commodity funds invest in precious metals, such as gold and silver, energy and agricultural goods.

Pezeshk-Zadeh said 36% of portfolio of investment funds comprises stocks. Bonds constitute 32% of the assets held by funds and bank deposits account for 29% of total assets of funds operating in the capital market, she said. 

With the obvious aim of propping up the sluggish share market and boost demand, fixed income investment funds have been obliged to allot a bigger portion of their portfolios to stocks and proportionately reduce investment in bonds.

According to SEO rules, fixed income investment funds are obliged to invest at least 15% of their financial resources in stocks, stocks rights, option contracts and commodity-based certificate of deposits. 

SEO earlier approved regulations that allow banks to acquire stake in investment banks and market making companies, a move expected to raise their role in the bourse.