Investment funds reduce their deposits in banks to minimums in 2012

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For the first time in a decade there are investment alternatives, also for the most conservative savers. This situation, together with the fact that Spanish banks are not offering great returns on deposits, has been reinforcing a trend that has been observed since last year, which is the withdrawal of money from entities in search of profitability. The national investment funds registered in July the lowest number of demand deposits, which is the money they have in the bank, since November 2012 and it is the fifth lowest data in the entire historical series that goes back to 1999. According to the Bank of Spain, this amount amounted to 23,118 million euros in the seventh month of the year. All the lower records correspond to the last part of the year 2012.

The explanation is simple. Eleven years ago, the countries of the European periphery were involved in an unprecedented debt crisis that led sovereign debt yields to reach maximums. In the case of the Spanish ten-year bond, it stood at levels of 6.8% that summer. And this meant alternatives for the fixed income universe, which is the largest asset in the world by investment volume.

Now the situation has changed again, with returns that are again attractive in the case of debt investmenteven if the reason is different. The European Central Bank (ECB) has spent twelve months pushing up the returns on both company and government bonds. Its nine increases in interest rates until last July, when the last increase to rates of 4.25% took place, are the reason why the Collective Investment Institutions (IIC) have also decided to look further to offer attractive returns to its participants. “Part of that money has been transferred to investments where there are currently opportunities and thus reduce their liquidity. Clearly, the trend this year in investment funds is to go towards products that invest in fixed income with returns of between 2% and up to 4% for a period of two to three years,” says Ángel Martínez-Aldama, president of Inverco, the employers’ association of investment funds Nor can we forget that, contrary to forecast, “variable income has had a very positive start to the year,” he concludes.

So far in 2023, the money that investment funds had deposited in banks has fallen by 18% and this drop exceeds 31% when compared to July 2022, just as the ECB undertook the first interest rate hike in a decade. There are a total of 10,500 million euros less in sight accounts deposited by the investment funds of our country in the bank.

The banks themselves have spent months trying to redirect customer savings from deposits to other more profitable investment products, despite higher commissions.

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