The impact of regulation-based constraints on portfolio selection: The Spanish case.

Discussion about the effect of constraints in portfolio selection is a popular topic in finance. In this paper, we test the portfolio performance under the existence of regulatory constraints. This paper tries to provide evidence of whether the existence of regulatory constraints translates into a better long-term performance of investment funds, one of the most important investment vehicles for citizens. We show the returns and their relationship with the portfolio's risk, compared to the same set without the usage of these constraints. The results state that, when using regulation as the constraining factor, we obtain more efficient portfolios. [ABSTRACT FROM AUTHOR]