Funds suffer 10% wipeout – 11 funds see values tumble 20%

Almost half of the investment funds in Portugal saw at least 10% shaved off asset values in 2022 in what was the worst performance since 2011.

The devaluation in funds by around €2.7Bn was in line with a sharp decline in virtually all asset classes in 2022, in many of which Portuguese investors had invested savings.
The bad year in the funds market has also led to a significant decline in amounts under management in the sector, although redemptions have not been very significant, meaning that the Portuguese continue to have confidence in funds.
The Portuguese Association of Investment, Pension and Patrimonial Funds (APFIPP) notes that from a total of 318 investment funds in various categories in the Portuguese market, only 11 managed to provide positive annual returns in 2022.
Actual negative returns affected 307 real estate investment funds (97% of the total), with just 90 (less than a third) managing to close the year with just one digit losses.
In other words, more than one half of investment funds managing Portuguese assets (179 or 56% of the total) registered losses of over 10% in 2022, while 11 funds suffered losses of over 20%.
The devaluation of assets was the overriding factor behind the falls in the amounts under management in the Portuguese funds market.
The market closed 2022 with €17,118 millions, a fall of €2,730 millions (-13.8%) on 2021. It was the worst result suffered by the Portuguese funds market since 2011 – the year in which Portugal sought assistance from the IMF, causing €3.4Bn to be wiped off the local funds market.
However, the amount of money pulled out from Portuguese investment fund managers’ portfolios was not nearly so bad.
Only €412 million was redeemed — less than the €600 million cashed out in 2018 and a far cry from the flight of capital from investment in funds seen in 2008 and 2011.
The negative performance in the funds market reflects the behaviour of asset markets overall in 2022 in which shares and bonds — the largest slice of funds portfolios – took a hammering with two-digit losses.