Passive investing beats Belgian banks by 1,9% p.a
Corentin Scavée
24 Mar 2016

Passive investing beats Belgian banks by 1,9% p.a

Whether your investor profile is « aggressive », « neutral » or « defensive », Belgian banks have generally an in-house investment fund to suit your needs. When it comes to investing, few people take the time to compare and analyse the financial products that are recommended. However, there exists notable performance differences. Today, Easyvest publishes a comparative analysis of funds offered by Belgian banks. What has been the return of in-house fund since 2007? Which bank offered the best performing funds to its clients? Have these funds performed better than what could have been achieved with index funds as recommended by Easyvest?

To answer these questions, we have thoroughly analysed the funds offered by large Belgian banks and here are our observations.


What immediately strikes us is the large disparity of performance between the funds analysed. Depending on your bank, your return over the studied period can go up to threefold in some cases. Divergences between funds being consistent across investment profiles, we can conclude that some banks are less competent than others when it comes managing your wealth.

We also notice that, against all odds, the performance of funds managed by private banks are not impressive. Indeed, not a single private bank stands out of the pack, despite a marketing speech that would let you think otherwise. The “professional” wealth managers are thus not better than their peers of the retail banking.

Finally, it appears that no fund actively managed by Belgian banks has generated a worthy return for its investors. Quite the opposite, it is striking to note that the passive investing approach using index funds, what we advise at Easyvest, stands out systematically and significantly against all the funds analysed and across all investment profiles. The outperformance observed is considerable and its impact on long term cumulated return of your investments is huge. Indeed, passive investing generated on average an outperformance of 1,9% per year which represents a total opportunity cost of 18% over the period of the study. This might not seem much but in reality it is 1,7 times more than what the average bank funds considered. When you consider the least performing fund, the difference is even more striking and reaches 3,2% per year, which is a cumulated opportunity loss of 36% over 9 years or a difference of performance of more than 300%. It is truly an admission of failure for Belgian banks and active management as well as a terrible new for Belgian investors who have not obtained the return on investment they deserve.

Note that the funds analysed in this paper are the best funds of their category for each institution considered. Funds that were not considered had poorer performances over the whole period of the study, sometimes yielding negative returns. Note as well that ensure the outmost objectivity of the study, we have made some assumptions impacting negatively the returns reported for the index funds approach (cfr. Methodology)


We followed a strict methodology to ensure that the results presented could not be questioned. In order to be fully transparent, you will find below the details of this methodology.

We focused on capitalisation funds to simplify the analysis and avoid arbitrary assumptions about how the amount distributed are reinvested. Indeed, dividends and interest received by capitalisation funds are reinvested in full in the vehicle and are therefore wholly in the observed performance.

When there were several classes of shares for a same fund, we systematically selected the one being accessible to a retail investor willing to invest the lowest amount possible.

We then removed from the sample funds that were not active in 2007, in order to compare funds based on a history of performance long enough to be meaningful and including the 2008 crisis.

The remaining funds were divided into three categories according to their asset allocation and investment profile banks attributed to them. For each profile, we selected the best funds offered by each bank to penalize no.

For each fund, we collected daily net asset values to determine their annualized returns over the studied period running from 31 December 2006 to 31 December 2015. Note that calculated returns do not take into account any entry fee, transaction fees, transaction taxes or withholding taxes that could be due when selling the funds. This assumption tends to favour funds offered by banks.

We finally compare the performance of these funds with the performance that could have generated a combination of index funds replicating the same asset allocation, an investment approach that we recommend at Easyvest. To create these virtual passive portfolios, we selected a world stocks index (MSCI All Country World Total Return EUR) and an euro-zone sovereign bonds index (iBoxx Euro Sovereign Liquid Global). Since it is not possible to invest directly in these indices, we assumed the existence of index funds that replicate their performance. The performance of these index funds was obtained by subtracting to the performance of the indices an annual fee of 0,2% for bonds and 0,5% for shares; this fees represent the commission received by a manager who would mirror these indices. We also reduced these performances further assuming a fee of 1% per year to include costs that could charge a passive investment advisor. Depending on the portfolio asset allocation, we thus removed between 1,2% and 1,5% to the performance. Portfolios were then reconstructed to reflect the 3 target asset weightings: 75% bonds and 25% equities for the LOW, 50/50 for the MEDIUM and 25/75 for the HIGH. Our calculations assume that these portfolios are rebalanced systematically every year on January 1st to realign these weightings.

As for the funds offered by banks, we did not consider possible entry fees, transaction fees, transaction taxes or any withholding that could be due when buying or selling these funds. However, note that most of these assumptions are unfavourable to the performance of index funds portfolio. Indeed, index funds like ETFs do not charge entry fees nor exit fees while funds sold by banks are typically subject to an entry fee of 2-3% and some to an exit fee as well. Besides, the fees charged by index funds manager for similar products are actually lower than those listed above. In addition, 1% of advisory fees proposed are in the upper range of what is done for passive investment advice.

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