There should be a common indicator for all. At present the yield is determined by the smaller funds

Mrs. Petkova, what’s your opinion about the present system of determining the minimum rate of return?

- There is a certain problem since in the present system the weight of the total assets is not taken into account. So the smaller funds making more risky investments involve also the others that strive at diversifying their portfolios. That should be corrected because the rate of return is important for the customers and pension insurance is a long term process which should be also quite safe. While discussing the system everyone was worried that the big funds would be determinant.

What do you think should be done?

- We have proposed that on the same principle as with announcing the yield, an indicator of the risk of all funds should be approved. At least the customers have to know what happens with their money all the time, to know how risky their portfolio is and what should they expect and eventually require from their fund.

Is it possible for the funds to manipulate the stock exchange prices?

- When a big player makes a sharp movement it is dangerous but the danger is the same for him as for all the rest. We saw that a serious rearrangement may be achieved by the actions of just one fund. We are all however interested in realizing our economic goals, including those of the Bulgarian Stock Exchange. From the very beginning we took our decision not to take part in mutual funds and if someone has not taken such a decision now that could be corrected. One of the reasons for our decision not to participate is that there is no way to control the type of stocks included in the portfolio of a mutual fund. And the direct investments in stocks are limited by law to 20 per cent. The second reason is that the fees and the commissions are by no means small while the benefit from such investments is quite disputable.

Does the growth of the Bulgarian capital market satisfy the requirements of the pension funds?

- At the end of the year the assets accumulated in the pension funds will be almost BGN 3 thousand million, which shows that we are developing faster than the capital market. We follow closely every new IPO but at this stage the market is not much attractive for us. In this sense this year I expect our investments to be directed abroad; in Bulgaria we just have no enough space to invest the accumulated assets.

What changes do you think should be made during the year?

- The Financial Supervision Commission considers the investment in real property as 100 per cent risky, which is not quite right. It is true that it is risky but there are clear regulations on measuring risk. Besides, it is within the framework of a well diversified portfolio. And finally, it is about 5 per cent of the assets of the fund, not 95 per cent. It may be risky, but the diversification of the investments leads to stability of the portfolio as a whole. And also we are long-term investors and not speculators seeking quick profit. We are all clear that the rate of growth of the real estate market will fall but nevertheless it will not stop bringing profit, though not so much high.