Are Icelandic mutual funds with international investments strategies able to compete with comparable foreign funds?

Abstract

This paper is about whether Icelandic mutual funds with international investments strategies are competitive with comparable foreign funds. The main results indicate that so is the case. Firstly, the Icelandic funds have a slightly higher average return but when returns have been adjusted for risk the performance is almost identical. The Icelandic funds take more risk than the foreign funds, which is explained totally by systematic risk. Secondly, there are no indications that Icelandic funds are closed or names are changed because of bad performance. Finally, the Icelandic funds have lower front load and back end load compared to the foreign funds but the management fees are similar.