Luminita Nicolescu

Department of International Economic Relations, 

Bucharest University of Economic Studies,

Romania 

luminicolescu@yahoo.com

Performance risk analysis on mutual funds versus stock exchanges in young financial markets

Florentin Gabriel Tudorache

Economic and International Affairs Doctoral School, 

Bucharest University of Economic Studies,

Romania 

gabriel_tud@yahoo.com

Armenia Androniceanu

Department of Administration and Public Management, 

Bucharest University of Economic Studies, 

Romania 

Research Department, University of Social Sciences, Lodz, 

Poland 

armenia.androniceanu@man.ase.ro 

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.

Received: September, 2019

1st Revision: December, 2019

Accepted: February, 2020

DOI: 10.14254/2071-8330.2020/13-1/18

JEL Classification: G15, G23, F30, F65

Keywords: mutual funds, Central and Eastern Europe, financial markets, Romania, Slovakia, Hungary