What are mutual funds?
Before discussing them let's define them:
Mutual funds are a set of private investment instruments (for both small and business investors) whose management, administration and monitoring are done by a specialized company. The funds are deposited in a financial entity.
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Tax measures
From a fiscal standpoint, taxes paid on profits from mutual funds vary depending on the term of the investment. The rate is 18% for investments generated over periods exceeding a year. The marginal participant level applies for profits from less than a year. Regardless of how long it took to earn the profits, the fund manager will withhold 18% in capital gains tax (the difference between the price at sale time and at the time the shares were purchased) when the shares are cashed in. In Navarra, the rate applied here is 20%.
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If the fund has performed negatively and there were losses for the year, the shareholder can offset this with heritage profits generated the same year.

If the losses persist even after this procedure is applied once, the investor can fight the red numbers with the rest of the yields from the tax year, up to a limit of 10% of these. If all this were not enough to make up for the bad investment, the Inland Revenue allows you to keep compensating for them as you file over the next four years.
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To buy shares in a mutual fund all you have to do is go to any licensed fund manager in Spain or whatever financial entity you prefer because all banks and savings and loans offer this kind of services to their clients. But keep in mind there are four kinds of fees to pay: management, deposit, purchase/sale every time you buy or sell shares and a�discount in favor of the fund itself.

Data about 2003
As of September, assets managed by mutual funds totalled 192,775 billion euros, with just over 8.23 million people in Spain holding shares. Total managed investment was up 13% compared to 2002.
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According to figures from the Association of Collective Investment Institutions and Pension Funds (Inverco), the average weighted yield from investment funds in the past 12 months rose in September for the second straight month, reaching 3.66%. The average weighted yields of the last 3, 5, 9, and�12 years ranged from -2,49% to 5,04%. The average for 2003 is 1.82%. One highlight was the 13.86% obtained by variable-rate national funds.

All categories had positive average yields in 2003. The most profitable funds in the first�nine months of the year were those that invested in shares of companies in emerging-economy countries and Spanish firms. The rates were 26.40% and 24.51%, respectively.