Investors increasingly look to foreign mutual funds
Disappointed by the performance of the Greek stock market, an increasing number of investors are channeling savings to foreign mutual funds. According to the latest data by the Union of Institutional Investors, domestic equity funds have experienced outflows of 76.56 million euros since the beginning of the year, while equity funds investing abroad have attracted 32.47 million euros. Mutual fund company officials believe the trend will grow in coming years, noting that the «internationalization» of portfolios is a global phenomenon and that the behavior of investors in Portugal and Spain followed a similar pattern after they gained access to the eurozone. For their part, fund managers believe that parallel to such a trend, there will also be an increase in the number of investors seeking professional advice, as the large number of available options make it very difficult for any individual investor to monitor the market – a costly exercise in terms of both time and money, particularly for foreign markets. They argue that the strongest lure for investors is the performance of funds, most of which in all categories show returns considerably above those of placements in individual stocks. For the time being, however, interest in mutual funds appears to be subsiding. With the Athens Stock Exchange (ASE) on a slide for about 30 months now, mutual funds have been influenced strongly; at the end of 2001, the total of mutual fund assets stood at 9.13 trillion drachmas, down from 10.52 trillion in 2000 and 12 trillion drachmas in 1999. Despite this, the number of mutual funds continues to multiply; from 20 in 1991, it has now reached 275. The stock market slide caused a flight from equity funds to bond funds, whose number of shares rose 13 percent in 2000 and 25.5 percent in 2001. The beginning of 2002, however, heralded an unpleasant surprise for bond fund investors; as interest rates rose, prices receded significantly. Thus, of the 33 domestic bond funds, only two are in positive territory for this year, with the average return standing at -0.58 percent. This has caused something of a backlash, as investors liquidate bond funds and enter the money market category or foreign equity funds. The latter are showing wide variance in performance since January 1: at the top is Interamerican International Opportunities with gains of 14.53 percent, while Nationale Nederlanden Information Technology trails last with losses of 17.79 percent. The Union of Institutional Investors continuously updates its website (www.agii.gr) on mutual funds.
