If the situation in a football match could be used as a metaphor, savers in Alicante would be cheering for deposits that remain steady while the rest of the market shows volatility. In late last year, inflation kept money tied up in many banks, yet Alicante residents continued to park funds in various savings instruments. While some products offered modest returns, the overall picture showed that deposits remained a central component of household finance as markets faced pressure.
Recent figures from the Inverco Observatory, the body that brings together the leading managers, show that by the end of 2022 residents of Alicante held mutual fund assets totaling 6.765 billion euros, down 3.9% from the previous year. This decline mirrored falls in both equity and fixed-income markets, resulting in a negative overall fund return of 9%. The director of studies and statistics, Jose Luis Manrique, noted that new contributions from participants helped partially offset the drop.
In contrast, bank branch volumes rose to 35.895 billion euros in December, up about 860 million from a year earlier, a 2.44% increase. Savings activity tended to concentrate in the first half of the year, but from September to December, rising costs and inflation prompted some households to withdraw or reduce deposits to cover higher expenses for businesses and households alike.
In Alicante, a notable gap persists between fund holdings and bank deposits. Inverco’s calculations show that the province’s mutual fund assets represent only 18.8% of deposited bank funds, four percentage points below the national average (22.7%). Other regions also illustrate different patterns: Teruel around 53% ratio, Guipuzcoa about 47.6%, and La Rioja near 45.6%. These disparities reflect variations in financial education and local investment preferences.
Manrique adds that, beyond education gaps, there is a tendency among Alicante investors to favor real estate or other types of investments over funds, which helps explain the relatively small share allocated to mutual funds.
Early this year, Manrique noted a possible shift away from cash toward securities as data at the national level suggested a move from deposits into funds. By May, funds had grown by roughly 6.5% on the year, supported by greater interest in fixed income and mixed asset funds.
This shift has been influenced by the higher interest rates offered by some banks, even as liquidity remains ample in the market. In the context of Spain, the latest Eurostat indicators show that the average one-year deposit rate hovered around 1.16% in March, with higher returns in some eurozone countries and neighboring markets, reflecting broader monetary dynamics.
What has changed is the profile of funds contracted. Investors have increasingly used fixed income options such as public debt and corporate bonds to enter fixed income funds. Last year, such instruments represented 29.8% of the country’s total exposure, a rise of six percentage points from the previous year. Guaranteed loans also rose to 12.7% from 9% in 2021, while mixed and variable income loans fell.
Mortgages in Alicante will become more expensive this way with rate increase
Finance indicators point to a rising trend in borrowing costs. Euribor is expected to close May around 3.86%, edging above April’s 3.75%. Banks have shown caution in lifting deposit rates, but market expectations are for continued increases as central bank policy evolves. Analysts anticipate Euribor breaching 4% during the summer, driven by ongoing monetary tightening and related developments in the European Central Bank’s policy outlook.