Fund firms have an optimistic outlook

There is no doubt that the subprime crisis has vastly changed the outlook of Spanish mutual fund firms. There is no such thing as “easy business” any more, while fund products are now facing a much wider range of competitors. However, the crisis is by no means the worst that has been experienced in the country, according to participants at the PWM/BNP Paribas Investment Partners conference in Madrid. “I have never seen a clear outlook in the Spanish investment fund industry,” said Cirus Andreu, chief of asset management at Banco Sabadell. “As long as there are investors, we will have business to do and we can’t forget that we have enjoyed a really good performance during the recent years.” According to Mr Andreu it will be vital to “make the correct choice in terms of what we provide for investors during forthcoming years”. Xavier Auguets, chief of the insurance, asset management and trading divisions at Caixa Catalunya offered another point of view. “Until this moment, the Spanish investment fund industry had grown together with the real estate boom. But now it seems that banking deposits are the enemy because of their important role in securing liquidity for the banks.” Nevertheless, Mr Auguets feels optimistic and trusts in “the imagination of the banks to get out of this situation”. However, he admitted that the fund firms “will have a big fight on their hands, to end the year without net outflows”. Sabadell’s Mr Andreu also shared some of this optimism for the industry, though this was driven in part by his negative perception of banking products.“The attractiveness of banking deposits will not last for so long,” he predicted, even though some banks offer an annual deposit rate of close to 6 per cent. Portfolio management Against this environment, Mr Auguets from Caixa Catalunya, considers that “portfolio management is the key pillar of investment” and a possible driver to reverse the current reality of money flowing out funds and into deposits. In Caixa Catalunya, portfolio management is done with funds of funds that invest in products of third parties. “By this method you can move the investments very easily with a small movement of the portfolio,” assured Mr Auguets. Mr Andreu believes it is important to offer clients good advice when it comes to speaking about open architecture product selection, because “long-term satisfaction needs guidance”. In fact, other experts agree that this guidance also helps keep the client loyal when markets are experiencing bad moments. “Open architecture is the chance to offer to a client the best product for his possibilities”, explained Javier Núñez, managing director of BNP Paribas Investment Management in Madrid. UCITS III Another issue discussed at the conference was the arriving of Ucits III products and their implications for the fund management firms. These funds bring innovation, suggested Mr Auguets, and so are often preferred as third party vehicles for private clients ahead of competing products. But they still have a long way to go to capture the imagination, he admitted. “They are attracting new clients, but these are still institutional investors,” said Mr Auguets. However, it is clear for Jaime Pérez Maura, fund selection director of Allfunds Bank, that the Ucits III regulation has allowed the arrival of good international products in Spain. Hedge funds were also highlighted as a product for the future, although according to Mr Núñez, “Spanish managers must develop the global talent needed to carry these funds.” That’s why the BNP Paribas offering in Spain is currently provided by its experienced alternative boutique, Fauchier Partners. Mr Núñez complained about the slow arrival of hedge funds in Spain, but he believes they are a product which is very necessary to service clients in current markets. Javier Martínez López, managing director of A&G, stood up for the importance of active management “This is useful to decorrelate portfolios,” he declared. JZM But for Jaime Pérez Maura, from Allfunds Bank, the future threat for Spanish mutual funds is a passive one, coming from ETFs, once their tax situation is eventually finalised. “Exchange traded funds have arrived and are here to stay,” confirmed Mr Pérez.

Andreu: Offer clients good advice