PERFORMANCE RISK ANALYSIS ON MUTUAL FUNDS VERSUS STOCK EXCHANGES IN YOUNG FINANCIAL MARKETS
PERFORMANCE RISK ANALYSIS ON MUTUAL FUNDS VERSUS STOCK EXCHANGES IN YOUNG FINANCIAL MARKETS

Summary/Abstract: Financial markets play an important role in the economies of the world as they are supporting economic development. The present paper focuses on the young financial markets of Central and Eastern Europe with the focus on three selected cases: Romania, Slovakia and Hungary. In these countries, the capital markets are studied through the assessment of performances and risks associated with mutual funds by comparison with stock exchanges. Statistical documentation and statistical empirical research were used in order to compare mutual funds’ evolution with the stock markets’ evolution. The period of analysis also comprised the global financial and economic crisis, with obvious consequences on the results of the analysis. Among the main findings of the study are: mutual funds performed better (both in terms of returns and risks) than stock exchanges in the periods of economic turmoil; a movement from investing in highrisk assets (equity) towards investing in low-risk assets (bonds and monetary assets) takes place in the periods of economic distress; there were more similarities than differences in the evolutions of mutual funds and stock exchanges in these three countries, illustrating common characteristics at the regional level. The study concludes that mutual funds outperform stock markets, especially during economically difficult periods. This can be taken into consideration by fund administrators when deciding on their assets portfolio and when marketing their funds to investors.

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