Poor Performance of Mutual Funds in Spain: 1991-2007

Abstract

During 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. During the past 10 years, the average return on the funds was lower than inflation. In spite of these results, on December 31st, 2007, 8,264,240 investors held 238.7 billion Euros in the 2,907 existing mutual funds. During 2007, the number of shareholders descended in 555,569 and the value of their assets in 6.1%.

Only 30 of the 935 mutual funds with 10-year history outperformed the benchmark and only two of them outperformed the overall index of the Madrid Stock Exchange (ITBM).

If the return of every mutual fund in the past 16 years had not been the one that was obtained but the benchmark of its category, the appreciation of the funds during 1992-2007 would have been 180 billion, instead of the 80 billion they got. The total of fees and other expenses for the period ascended to 34 billion.

Keywords: mutual funds, Spain, return to shareholders, benchmark, appreciation of the funds, TER

JEL Classification: G12, G31, M21