Bond funds stay afloat in sinking mutuals market The Greek mutual funds market continued to slide for the third consecutive year in 2002, with most funds posting negative returns, according to the Union of Institutional Investors. Domestic bond funds outperformed all other categories, registering an average return of 4.89 percent, against 4.11 percent in 2001. Alpha Bond Fund topped the category with a performance of 7.99 percent. Among foreign bond funds, whose average return dropped from 4.85 to 0.45 percent, Alpha European Government Bonds came top with a return of 8.34 percent. In the money market fund category, 27 of the 25 domestic funds performed above 2 percent and six of them above 3 percent. Interamerican Money Market Fund came top with 3.38 percent. Interamerican MM also led in the international money market subcategory with gains of 3.0 percent, when the average was -2.84 percent. Equity funds were the biggest losers, with the average return in the domestic subcategory crashing 27.24 percent lower. Egnatia Athina minimized losses at -8.13 percent. The Athens bourse general index in 2003 ended -32.53 percent lower. In the foreign equity fund subcategory, which ended an average -29.39 percent lower, Alpha Trust Emerging Europe outperformed with gains of 5.58 percent. Finally, the 25 domestic balanced funds posted an average negative return of -13.40 percent. Total asset value of the Greek mutual funds market in 2002 fell 1.41 billion euros, or 5.26 percent, to 25.38 billion. OTOE favors T-bill issue, casts doubt on results The Finance Ministry’s decision to issue treasury bills with interest rates between 50 and 100 basis points above inflation is in the right direction but will have limited effect, the Bank Employees Union Federation (OTOE) said. «The issue will be on a limited scale and is not at all certain to cover all small savers. On the contrary, those possessing considerable amounts of capital will find ways of benefiting from a correct government initiative that is not addressed to them,» OTOE said in a statement. It called on the government to adopt further related initiatives, such as abolishing the tax on deposit interest and legislate for more favorable loan terms. Banks Greek banks face better growth prospects than most others in Europe, Alpha Bank’s top economic adviser, Prof. Georgios Provopoulos, said in the bank’s bulletin for shareholders. He notes that Greek banks are expected to maintain or improve their growth rates and margins in lending due to the relatively high growth rates of the Greek economy and those of neighboring countries where Greek firms are expanding. He notes that bank profits today overwhelmingly emanate from core business growth, mainly interest and commission income. Investment NovaBank has launched a new guaranteed capital investment product, «Guarantee Euro 5.10%,» a combination of 50 percent three-month deposit at the annualized rate of 5.10 percent, and 50 percent 12-month deposit offering an additional 3 percent for each day the three-month Euribor rate fluctuates within a band between 2.65 and 3.50 percent. The new product will be available until January 17 without commission and minimum investment is 10,000 euros.