A portfolio of funds gives returns 61% higher than cash left in a bank account, research finds


The stark difference of investing EUR10,000 savings rather than just putting them in a bank account over the past decade has been estimated at over EUR7,000.

A 10-year investment in a portfolio of UK or European UCITS funds, with 40% in equities funds, 30% in bonds and 30% mixed funds from 2010 to 2019 would have resulted in the EUR10,000 investment rising 61% to EUR16,100, according to the European Fund and Asset Management Association’s (EFAMA) latest report.

Meanwhile, the value of the sum if left in a bank account in the period would have shrunk 10% in real terms, to EUR9,000.

The report was developed using data available in the latest ESMA’s annual statistical report.

Bernard Delbecque, EFAMA senior director for economics and research: “Our report illustrates the financial loss that European households have incurred by holding too much of their savings in bank deposits during the last decade. Policymakers should also emphasize the benefits of investing instead of focusing primarily on the cost of doing so, to avoid putting people off from investing altogether.”

The report also showed the average net annual performance of equity, bond and mixed UCITS funds was 7.6%, 2.3% and 3%, respectively during the 10-year period. These positive returns contrast with the 1% loss recorded on bank deposits.

The report also highlighted the heterogeneity of the fund universe, with big differences in the performance of the higher- and lower-performing active and passive funds, as many active funds outperformed passive funds in net terms, while many passive funds also outperformed active funds.

The strong net performance of UCITS in recent years can also be explained by decreasing fees, the report found, with a 16% cumulative decrease in the ongoing charges of funds over the last four years for equity funds, 7% for bond and 3% for mixed UCITS.

The average cost of an active equity UCITS launched last year was 0.81% compared to 1.39% for the average ongoing charges calculated for the whole universe of active equity UCITS in December.

“Our analysis of Morningstar Direct’s UCITS data revealed a downward trend in the ongoing charges of recently launched UCITS partly due to increased competition between fund managers seeking to attract investors into their new funds,” said Vera Jotanovic, EFAMA senior economist.


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