The rises in interest rates are transforming the way in which Spaniards make their savings profitable. Since the ECB changed its monetary policy in July of last year, investment funds have accelerated and have become one of the most sought-after financial products, reaching record levels of deposits. They are now, together with Treasury bills, the investment of the moment, waiting for the big banks to decide to remunerate the savings.
According to still provisional data from the association of managers Inverco, the assets of investment funds have increased by more than 17,000 million euros in Spain between the end of last year and March 2023, reaching a record volume of more than 320,000 million. of euros. The figure, which includes both private and other resources, represents the largest increase recorded over six months in more than a decade.
In March, between convulsions in the markets due to the fall of Credit Suisse and new rises in interest rates, net fund subscriptions accelerated and contributed to the quarter slightly exceeding 9,000 million euros. Most of this amount, 7,907 million euros, corresponds to fixed income, which is the most conservative formula. Inverco calculates that, in three months, these products have given a return of 1.15%, more than that provided by bank deposits after one year.
This movement is a sample of the economic climate itself: there is accumulated savings, interest in taking advantage of it and also a certain fear of market volatility. Inverco indicates that the Spanish public debt, which is the quintessential fixed income product, is marking returns of 3.3% per year on the ten-year bond. Meanwhile, the Ibex has fallen 2% in March amid uncertainties in the banking sector, but accumulates a rise of 9% in the first quarter.
CaixaBank Research calculates that Spanish households easily exceed 2 trillion euros in savings, although it also warns that their ability to raise the mattress is now much less than at the time of the pandemic. These resources, as indicated by the Bank of Spain itself, are helping to mitigate the impact of inflation on families.
The particular fever for investment funds, which are marketed above all through banks, comes after that of Treasury bills, in whose latest issuances individuals have come to exceed half of the requests. Only through the web, small savers have bought bills for more than 3,100 million euros at the click of a button. They already have almost 5% of all bills in circulation, the highest percentage since the 2008 crisis.
The other side of the coin is in deposits, which despite the offers from the smaller banks still do not offer great profitability for now. The Bank of Spain places its annual return in February at 0.86%, compared to 0.59% a month earlier. The forecast is that they will improve as liquidity in the system decreases, which will most likely happen from June, when the banks will finish repaying the ECB the advantageous loans received with the covid.
The Bank of Spain calculates that Spanish households had deposits of almost 923,000 million at the end of February. The figure grew strongly during the pandemic, when families saved more than 20% of their income, but in the first two months of the year it has fallen by almost 19,000 million, at the fastest rate in more than a decade. Its profitability is much lower than that of other products and many individuals have decided to take their money elsewhere, especially when the ECB has already raised rates to 3.5%.
