European Business Schools Librarian's Group

IESE Research Papers,
IESE Business School

No D/746: Poor performance of mutual funds in Spain. 1991-2007

Pablo Fernandez (), Vicente J. Bermejo and Andrada Bilan
Additional contact information
Pablo Fernandez: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Vicente J. Bermejo: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Andrada Bilan: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN

Abstract: Over the past 10 and 16 years, the average return on mutual funds in Spain was lower than the average return on government bonds at any term. Over the past 10 years, the average return on the funds was lower than inflation. In spite of these results, on December 31, 2007, 8,264,240 investors held 238.7 billion euros in the 2,907 mutual funds then in existence. During 2007, the number of shareholders fell by 555,569 and the value of their assets, by 6.1%. Only 30 of the 935 mutual funds with a 10-year history outperformed the benchmark and only two of them outperformed the overall index of the Madrid Stock Exchange (ITBM). If in the past 16 years every mutual fund had achieved the benchmark return for its category, the gain in value would have been 180 billion euros, instead of the actual figure of 80 billion euros. Total fees and other expenses for the period amounted to 34 billion euros.

Keywords: mutual funds; return to shareholders; benchmark; appreciation of the funds:

JEL-codes: G12; G31; M21

27 pages, April 23, 2008

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