Mutual fund revolution: EC wants them to be guaranteed like banking deposits

The European Commission wants to include mutual fund investors in compensation schemes, proposing damages of as much as 50,000 euros for each client that suffers losses. However, European states are against such a move, under the pressure of fund managers and banks, fearing that such a scheme for funds would generate high costs.

Romanian mutual funds have over 220,000 investors, with 100,000 having entered in the past two years, placing their money particularly in currency funds, which have been promoted by banks bundled with deposits.

Bourse investors, 86,000 overall, are protected by the Compensation Fund in case the broker with which they opened the trading account failed, while banks' clients have over 15 million deposits and current accounts guaranteed within the limit of 100,000 euros.

The gap is the wider as mutual funds address small, retail investors, and in Western countries they are as popular as investments on the Bourse.

Domestic market official sources maintain such a protection move "is not justified as the Romanian capital market legislation guarantees mutual funds' assets are kept separately from banking deposits and are not part of the list of liabilities in case of bankruptcy".