Shift in retail money from funds to deposits

Shift in retail money from funds to deposits

Fecha: febrero 2020

Ángel Berges, Federica Troiano, Fernando Rojas, A.F.I

Fondos de inversión, Depósitos a la vista, Rentabilidad, Inversiones

Spanish and International Economic & Financial Otlook, SEFO, V. 9 N.º 1

The growth in the volume of retail customer funds managed by Spain’s financial institutions has accelerated in the last year from the scant 1% observed in prior years to nearly 4%. This development has occurred in tandem with a two-percentage point increase in the savings rate. Of particular note is the shift from mutual funds to demand deposits. While the former attracted increased capital after 2012 thanks to the strong performance of equity markets and ultra-lax monetary policy, this trend has lost steam over the past year in both Spain and other main EU markets. Specifically, assets under management contracted by around 4 billion euros in Spain with bank deposits growing by 37 billion euros. Such a reversal is curious given the continued decline in demand deposit interest rates, indicating growing caution among households due to global uncertainty as well as increasing sensitivity to swings in the value of holdings. Importantly, these changes in risk appetite could lead to greater volatility in households’ financial asset allocation decisions, with potential implications for financial stability.

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