Who knew? Maltese run equity funds underperform badly

So, after having looked at Maltese government bonds, I decided to take a quick look at what’s available in the local market in terms of funds. Maltese government bonds are usually oversubscribed and local investors love them, so I checked whether Malta has some locally owned hedge funds or mutual funds. And boy, what a surprise. Taking a quick look at the equity funds run by the most popular Maltese financial professionals, no wonder local investors are addicted to government bonds like heroin junkies. Maltese-run funds are doing horribly. This is not my opinion, this is a fact, so much so that technically these funds, have no reason whatsoever to exist other than to prey on naive customers who have little knowledge about funds and how markets work.

See, you may have heard of Jesmond Mizzi, the financial advisor who publishes his expertise in the Times of Malta. That’s a good grift: buying pages through ads on the Times of Malta to pose yourself as a financial genius when your funds are underperforming the markets to a great extent, so much so that the fund would have been better off if it had just bought the S&P500 index. The fees are exorbitant relative to the returns being made. Clients have to pay 3.5% of their capital as an entry fee and an additional 2.09% every year.  From 2017 to today, Jesmond Mizzi’s Global Equity Fund made a return of 15.9%.  The S&P500 made a return of 73% in the same time frame. And here’s what’s hilarious in all of this. Jesmond Mizzi’s equity funds are composed of up to  40% in ETFs (other funds). So, basically, clients pay Jesmond Mizzi to send their money to other funds. Incredible.

There’s something that is not hilarious about all of this, however. Jesmond Mizzi is a financial advisor and owning and running funds is a direct conflict of interest with his role as a financial advisor. You are either a fund manager or a financial advisor and I can’t understand how you can be both. If you are a financial advisor who owns a fund you have a conflict of interest because promoting your own fund may actually not be in the interest of the client, especially if you are underperforming the market.

Now, let’s turn to Bank of Valletta’s funds where we can find nearly a carbon-copy of the same kind of style and underperformance. Their equity funds have exorbitant fees, are composed of ETFs, and are massively underperforming the markets. Take a look at BOV’s European fun for example the Vilhena European Multi-manager fund. They take away 4% of your capital and charge you 1.27% of your capital, so they give your money to other fund managers (the fund is mostly composed of ETFs). The fund has made 20.5% since 2017. The German stock market has made 32%. in the same time frame. Their European fund fared worse than their global fund which is made up of mostly US securities and has made 37% since 2017.  Then you have BOV’s growth portfolio which is barely up 15% since its inception in 2017.

Now, let’s turn to Calamatta Cuschieri so that I may not be accused of having any preferences with regard to anyone. Like Jesmond Mizzi, Calamatta Cuschieri promote themselves as financial experts and have funds they run with other people’s money. They also have a conflict of interest because they are financial advisors and fund owners at the same time. The equity funds run by Calamatta Cuschieri are not only underperforming markets but some are also in the red meaning people have lost money. The same model as to other local funds applies: exorbitant fees and a fund composed of many ETFs. This fund has for example made a miserable 12% since 2014 while the S&P500 made 123% in the same time frame. Other equity funds of theirs are in the red.

All of these fund managers have bond and treasury funds that some of them are deeply in the red showing that Maltese fund managers were all buying bonds at premium prices during the time when interest rates were negative and bond yields were also 0 or negative. It is highly unlikely some of these losses will be recovered soon given that it is highly unlikely we will ever go to negative rates scenario any time soon (government bond yields move with interest rates).

Another interesting thing I have noted with all of these funds is that their managers are mostly first-timers, meaning they are mostly managing people’s money for the first time ever with many having no experience whatsoever in trading or investing, lacking also a personal track record of their investments and businesses, and this is probably a sign of the industry’s standards. Like in any other industry in Malta, the most highly-skilled and experienced people leave abroad for greener pastures.

The only aim of a fund is to beat the market it is competing in and if it consistently fails to beat the market then it has no reason to exist at all. This is very simple. You’re either good at this job or you’re not. There is nothing wrong with the person being bad in this job. Few can do it. It’s the gifting and the predatory and dishonest nature of the industry which needs to be pointed out: these people are not the experts they portray themselves to be and they are underperforming the market.

And there you have it. Fund managers in Malta are doing horribly and this is bad for the economy. If we had successful financial managers who were hitting home runs and bringing in cash to their clients, they would have had plenty of cream to put in the local stock market or in potential private investments as a patriotic betting position. There would also have been more enthusiasm for the local stock marke4t as a result.

I will be very happy follow these funds and report more on them if there is interest from my readers. Newspapers in Malta would never dare criticise the Maltese financial industry because it spends a lot of money on advertising. Moreover, Maltese people in finance may probably depend a lot on these names I have mentioned for jobs and whatnot, so I can hardly see the possibility of anyone criticisng these people, so far. My critique may also help to improve the standards in this so far, very shabby industry.

Also, just to conclude. I am not a financial advisor. I am not selling you anything. I’m not giving you advice on what to do or what not to do. I am only presenting you facts in a hard-hitting critical style. What I can tell you for sure, is that if you want financial advice go to a financial advisor and ask him or her:

Is your money in the same product that you are advising me to buy? And if so, how much of a portion of your wealth is in the product you are asking me to buy?

I may ask the directors of Jesmond Mizzi and Calamatta Cuschieri whether they have any of their own money in the funds they own and that they manage. If they don’t then that’s a very serious red flag.



  1. An inspiringly analytical article, whether written by Mark Camilleri himself or written for him. The article fails to mention though APS Bank who would have taken the biscuit if they had also been considered in the same vein as the other financial advisors mentioned. APS Bank similarly provides investment advisory services as well as manages and promotes its own funds to its customers, with the added insult that APS would like to come across as “the” ethical organisation standing on a high moral ground. MFSA, on its part, in its typical traditional attitude, pretends not to see the elephant in the room, namely the flagrant conflict of interest posed by financial advisors also promoting own funds. We at Finco Treasury Management pray to God to help us to continue to see the obvious and avoid such manifest conflicts of interest.

  2. Of course, I write the articles myself. I studied history at university with a focus on economic history and kept educating myself on finance and money when I was a government executive given that I had to handle public funds. Today, I use my knowledge to supplement my income and to finance my projects.

    • The finance industry is very predatory on vulnerable and gullible people and this is why I would write such an article – these can be anyone, even people close to me like my parents. I wouldn’t be bothered if rich people lose their money – it’s a free world. The conflict of interest is very glaring.

  3. Anyone who is prepared to cough up over 5% in management fees is a fool. A broad-based ETF available on a multitude of trading platforms internationally, will charge you less than .3% p.a.

  4. Versus listing of 2 or 3 distributors/manufacturers of funds in Malta and claiming that they represent the industry, you should review all major distributors. However in doing so, it might detract from the inflammatory nature of of the article. By hand picking underperformers that support your allegations, you are acting quite unethically in your reporting of such claims.

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