In a talk with IRIB news, Mesiam Fadaee said investment funds have so far attracted 5,300 trillion rials ($19.6 billion) of which fixed income investment funds accounted for 3,700 trillion rials ($13.7b).
“Given the low risks, more people have been approaching investment funds,” Fadaee said, adding that in some cases investment funds are more successful than banks in attracting investment.
“Investment funds have managed to overtake some banks in attracting people’s capital as they pay higher profits at regular intervals,” he said.
As an example, he pointed to a listed fund that has attracted capital three times higher than the Middle East Bank, a private Iranian bank.
As money and traction grows, the regulator has stepped up efforts to make indirect investment in the stock market more attractive to investors with marginal financial literacy.
Diversifying investment funds, easing access via online trade platforms and cutting red tape and bureaucracy are among recent measures the SEO has taken to make indirect investment in shares appealing.
Apart from fixed income funds, Fadaee encouraged investment in commodity-based funds whose portfolio has surpassed 26 trillion rials. “Gold funds account for about 95% of the portfolios of commodity funds. These funds could be a good substitute for direct investment in the gold market”.
Commodity funds invest in precious metals, such as gold and silver, energy resources such as oil and natural gas, and agricultural goods such as wheat. Such funds in Iran are normally backed by gold.
Bigger Space for Market Makers
Fadaee said the regulator is trying to improve efficiency of market making funds to boost liquidity of shares, noting that the permits issued to market markers increased in recent months.
“The number of market making companies rose from 35 in December to 48 now. Fifteen more companies have agreement in principle.”
The SEO’s policy is to give unlimited permits to market makers and cancel the permits of dysfunctional market making funds, he was quoted as saying.
Market makers essentially act as wholesalers buying and selling securities to balance the market and help keep the market functioning. Market making gained traction after Iran's equity market took a drubbing under a prolonged sell-off last summer.
Caption: Investment funds have managed to overtake some banks in attracting people’s capital.