We are an association with a clear vision
Collective investment has been growing in popularity in recent years, yet it is still a segment that is subject to less regulation and supervision. We therefore see it as important to pay close attention to increasing the financial literacy of the investing public and strengthening the self-regulatory elements in this segment.
Over the last 10 years, the ratio of CIFs has changed significantly in favour of those QIFs that were primarily established to raise funds from qualified investors, which allow these investors to participate in the business of individual business entities (the founders of the CIF) in various fields of business and investment and to share both the risks and rewards arising from these investments and businesses. The establishment of new CIFs primarily as "tax vehicles" has virtually disappeared. The huge expansion of the collective investment industry, including the stand-alone CIF segment, that we have experienced in recent years can be illustrated both by the growing number of CIFs themselves and by the total amount of assets managed by CIFs today.
4
funds in association
8
bilions CZK in funds
450
investors of represented funds
Especially in the current period of high inflation, the volume of assets managed by the CIF segment is expected to grow significantly. In terms of business, funds focused on real estate and property development dominate among CIFs. In view of the situation on the real estate market, funds focusing on various alternative investments or on a classic mix of equity, bond or mixed investments are becoming increasingly popular.
Activities of AFKI
Our goal is to strive for the stability and development of the capital market in the Czech Republic. Furthermore, we are here to defend the interests of qualified investor funds and to promote moral and ethical principles in business dealings, which leads to strengthening confidence in the capital market.
We want to achieve this through our core activities.
- Bringing together CIFs and entities providing services to these funds.
The number of entities operating in the CIF market is growing and under the wings of our Association you will find only reputable entities that operate within the boundaries of regulation and legislation. - Supporting the members of the Association and working towards their common goals.
A group of professionals who know what they are doing and are moving towards a common goal. The journey through the CIF market can be a thorny one, but when we come together we gain the strength we need. - Popularization and promotion of the capital market in the Czech Republic.
Although the CIF market and awareness of collective investment has been growing in recent years, we believe it is necessary to continue to strengthen the financial literacy of the investing public. The success of the capital market sector lies, among other things, in its awareness, which is why we focus on popularisation and education in this sector. - Cooperation with foreign entities focusing on capital markets.
- Representing and defending the interests of the Association's members before public authorities and bodies of international organisations.
AFKI Board Members
Pavel Makovec
President of the Association
AFKI
Petr Žáček
Business Director
SNP INVEST, Investiční fond, a.s.
Lukáš Hrma
Business Director and Member of the Investment Committee
ČSNF SICAV a.s.
Pavel Jíša
founder and member of the Supervisory Board
Českomoravský fond
Lenka Chobotová
Secretary of the Association
AFKI
Jindřich Duffek
Relationship Manager
AFKI
History of Qualified Investor Funds (CIFs) in the Czech Republic
For the first time since the coupon privatisation, the legislation allows for the creation of closed-end investment funds, which were banned after a series of frauds against investors during the coupon privatisation, when these funds were compulsorily converted into open-end investment funds (so-called compulsory fund opening). However, the possibility of reopening closed-end funds was initially restricted to so-called qualified investors and the duration of such funds was limited to a maximum of 10 years. After 10 years, it was envisaged that the CIF would cease to operate, the assets of the fund would be sold and the proceeds of the sale would be distributed and paid to the shareholders of the fund. The 2012 amendment to the Investment Companies and Investment Funds Act (ICAIF) allowed for the conversion of CIFs into open-ended funds. In terms of operation, CIFs are divided into self-managed funds and funds managed by management companies (licensed by the investment company). Some investment companies have even been set up with the intention of managing their CIFs for clients.
The motivation for setting up and operating CIFs was initially essentially twofold: the original one, which stemmed from the original intention to create new opportunities for collective investment, and then the second motivation, which was even significantly dominant at first, was the possibility of using CIFs as a "tax vehicle", which was due to the fact that the profits of collective investment funds, unlike those of other commercial companies (especially joint stock companies), are taxed at a rate of 5% as opposed to the general rate of 15% on profits. More than 90% of newly established CIFs were established primarily as "tax vehicles" and served as a tax optimization tool for various business groups, and it was virtually impossible for new investors from "outside" to participate in the investment (business) of such CIFs. Investment companies that offered to create and manage such CIFs even used the marketing acronym that "5 is more than 19". The use (misuse?) of the CIF legislation for tax optimization has led and continues to lead to efforts to additionally regulate this type of investment (business) or to increase its taxation to the level of other commercial companies. However, several changes in legislation that were intended to limit or prohibit the use of "tax" CIFs have usually missed the mark and the favourable tax regime for collective investment funds, including CIFs, is still in place.
Over the last 10 years, the ratio of CIFs has changed significantly in favour of those CIFs that were primarily established to raise funds from qualified investors, which allow these investors to participate in the business of individual business entities (the founders of the CIF) in various fields of business and investment and to share both the risks and rewards arising from these investments and businesses. The establishment of new CIFs primarily as "tax vehicles" has virtually disappeared. The huge expansion of the collective investment industry, including the stand-alone CIF segment, that we have experienced in recent years can be illustrated both by the growing number of CIFs themselves and by the total amount of assets managed by CIFs today.
