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ETFs vs. Mutual Funds: Evidence from the Greek Market

Author

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  • Gerasimos G. Rompotis

    (KPMG Greece (Senior Auditor), National and Kapodistrian University of Athens (Researcher))

Abstract

This paper expands the debate on "Exchange Traded Funds vs. Traditional Mutual Funds" using for the first time data from the emerging Greek ETF market. In particular, trading and business data of the first ETF launched in Greek market, namely the ALPHA ETF FTSE ATHEX 20 are employed along with the respective data of its mutual funds counterparts (one index fund and 3 active mutual funds) so that we will examine various issues concerning return, risk and expense features of these competitive investment vehicles. Four different open-ended mutual funds are used in the study, each of which has the same benchmark as the ETF considered. The applied empirical analysis provides various interesting findings. At first, the classic mutual funds are more expensive than the ETF but they perform better and are less volatile. Going further, the ETF is more conservative that the open-ended mutual funds. Moreover, the relevant performance of the ETF in respect of the return of the tracking index is better than the corresponding performance of the funds. Finally, the tracking error of the ETF is reasonably found to be lower than the tracking error of the actively managed funds but it is greater than the tracking error of the index fund.

Suggested Citation

  • Gerasimos G. Rompotis, 2011. "ETFs vs. Mutual Funds: Evidence from the Greek Market," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 9(1), pages 67-84.
    • Handle: RePEc:seb:journl:v:9:y:2011:i:1:p:67-84
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    References listed on IDEAS

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    1. Edwin J. Elton, 2002. "Spiders: Where Are the Bugs?," The Journal of Business, University of Chicago Press, vol. 75(3), pages 453-472, July.
    2. James M. Poterba & John B. Shoven, 2002. "Exchange-Traded Funds: A New Investment Option for Taxable Investors," American Economic Review, American Economic Association, vol. 92(2), pages 422-427, May.
    3. Gerasimos G Rompotis, 2009. "Interfamily competition on index tracking: The case of the vanguard ETFs and index funds," Journal of Asset Management, Palgrave Macmillan, vol. 10(4), pages 263-278, October.
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    Cited by:

    1. Marszk, Adam & Lechman, Ewa, 2021. "Reshaping financial systems: The role of ICT in the diffusion of financial innovations – Recent evidence from European countries," Technological Forecasting and Social Change, Elsevier, vol. 167(C).
    2. António Afonso & Pedro Cardoso, 2017. "Exchange-traded Funds as an Alternative Investment Option: a Case Study," Working Papers REM 2017/22, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.

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    More about this item

    Keywords

    ETFs; Mutual Funds; Performance; Risk; Expenses; Tracking Error;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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