Behavioural Patterns in German and Spanish Equity Funds: A Comparative Study

This study tries to detect certain differences in the German and Spanish investment fund markets during the period 1995-2004. Specifically, the study compares the trends detected in both industries in two interesting financial topics such as performance persistence and the analysis of the impact of past returns on new money flows by using contingency table methodology. Present results provide evidence of higher performance persistence in the Spanish market, indicating that this market is less developed than German industry and its returns are more dependent. In trend reversal periods, negative persistence is found, probably because of its youth. In contrast, the relationship between past returns and new money flows is stronger in German funds in spite of the fact that the persistence phenomenon is weaker.