Have mutual funds investing in safe haven assets outperformed those investing in equity during the 2020 market turmoil? : An analysis of the impact of funds´ investing targets and characteristics on their returns during 2020

Abstract

This dissertation investigates the returns obtained by mutual funds during the global economic turmoil caused by the arrival of the Covid-19 pandemic in 2020. The objective of this paper is to analyse whether mutual funds investing in safe haven assets have outperformed actively managed mutual funds investing in international equity. Additionally, this dissertation studies the characteristics of these investment vehicles that have had an impact on their performance and the geographies that have been more profitable for mutual funds in 2020. The analysis has been conducted using a linear regression model, with independent variables analysing the assets in which a fund invests, some internal characteristics of the fund and its main continent of investment in 2020. The results suggest that funds investing in gold and treasury bonds in 2020 have obtained greater returns than those investing in international equity. Additionally, the model shows that funds with higher expense ratios, more assets under management and higher risk ratings in Morningstar have obtained greater returns in 2020. Finally, it seems that mutual funds have obtained higher profitability investing in Asian markets during the Covid-19 crisis. This dissertation aims to shed some light on the performance of safe haven assets from the viewpoint of the mutual fund industry during the impact of Covid-19, and update previous findings on the characteristics of mutual funds influencing their returns. These research findings are expected to provide some valuable information for investors in similar market situations to the one experienced during 2020.