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Poor performance of mutual funds in Spain. 1991-2007

Author

Listed:
  • Fernandez, Pablo

    () (IESE Business School)

  • Bermejo, Vicente J.

    (IESE Business School)

  • Bilan, Andrada

    (IESE Business School)

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.

Suggested Citation

  • Fernandez, Pablo & Bermejo, Vicente J. & Bilan, Andrada, 2008. "Poor performance of mutual funds in Spain. 1991-2007," IESE Research Papers D/746, IESE Business School.
  • Handle: RePEc:ebg:iesewp:d-0746
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    File URL: http://www.iese.edu/research/pdfs/DI-0746-E.pdf
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    References listed on IDEAS

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    1. Fernandez, Pablo, 2006. "Equity premium: Historical, expected, required and implied," IESE Research Papers D/661, IESE Business School.
    2. Brown, Stephen J & Goetzmann, William N & Ross, Stephen A, 1995. " Survival," Journal of Finance, American Finance Association, vol. 50(3), pages 853-873, July.
    3. Philippe Jorion & William N. Goetzmann, 1999. "Global Stock Markets in the Twentieth Century," Journal of Finance, American Finance Association, vol. 54(3), pages 953-980, June.
    4. Merton H. Miller, 2000. "The History Of Finance: An Eyewitness Account," Journal of Applied Corporate Finance, Morgan Stanley, vol. 13(2), pages 8-14.
    5. Fernandez, Pablo, 2004. "Shareholder value creation of microsoft and GE," IESE Research Papers D/564, IESE Business School.
    6. Fernandez, Pablo, 2002. "Valuation Methods and Shareholder Value Creation," Elsevier Monographs, Elsevier, edition 1, number 9780122538414.
    7. repec:rus:hseeco:278562 is not listed on IDEAS
    8. Haitao Li & Yuewu Xu, 2002. "Survival Bias and the Equity Premium Puzzle," Journal of Finance, American Finance Association, vol. 57(5), pages 1981-1995, October.
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    1. repec:eee:riibaf:v:41:y:2017:i:c:p:600-612 is not listed on IDEAS

    More about this item

    Keywords

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

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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