Despite the crisis, international fund management companies have grown almost continuously within the Spanish market in recent years. With the exception of some periods in which their assets have fallen (as was the case in early 2012), collective investment institutions of foreign companies which are available for sale in Spain have doubled their assets under management in a period of three years. As Inverco’s latest estimates indicate, the assets of foreign CIIs in Spain would be around Euro 60 billion ($80 billion) as at the end of June. This figure doubles the Euro 30 billion estimated by Inverco in late 2009.
Inverco, which performs its estimates with the data from the CII’s from which it receives information (in this case, extrapolating data from 24 fund management companies with Euro 45.5 billion in assets under management, which are approximately 75% of the total), estimates that figure as the amount traded in assets amongst all domestic customers, both retail and institutional. The data shows an increase of 13.2%, a total of Euro 7 billion, in the first half of the year. The capital gain is comparable to that managed by national fund managers, which, according to Inverco and Ahorro Corporación, during the first half of the year saw asset gains of almost Euro 10.6 billion, i.e. around an 8.5% growth.
A 30% share
Inverco estimates that the total CII assets marketed in Spain, both national and international, would be close to Euro 200 billion (137.5 billion managed by domestic companies, and 60 billion by foreign ones, according to data as at the end of July). According to this information, foreign managers have achieved close to a 30% share of the Spanish market, the highest in history. That figure would be lower when using data from the CNMV ( National Securities Market Commission), which takes into account all fund management companies; according to its latest available data, as at the end of March 2013, the securities supervisor estimates the assets managed by international asset management companies at 44.5 billion. Even so, foreign CIIs would have a weight in the industry of around 20%, which is four times higher than the March 2009 share (7%). And the money keeps rolling into them: in total, the amount of net subscriptions to foreign collective investment schemes which facilitate their data to Inverco stood at Euro 2.9 billion in the second quarter of 2013.
Diversification and product offers
According to experts, this trend of capital raising and growth is due to several factors, including the smaller business volume of international institutions in Spain, which allows them greater potential for growth, and the strong commitment which private banks have made since last year to international funds domiciled in for example, Luxembourg, as a way of diversifying against the risk of peripheral countries.
The gradual return of investors to mutual funds, encouraged by the improvement of the economic situation but also by the decision by the Bank of Spain of penalizing “extratipados” (extra high interest rate) deposits earlier this year, also explains the positive dynamics of international, as well as of the domestic CIIs. The fund management companies surveyed also point out the innovative supply of products, which is in line with market developments. By type of products, the fall of extratipos on deposits and on the Spanish risk premium has led investors towards absolute return funds or actively managed fixed income as the great alternative, as well as towards those which distribute income and dividends. Those institutions which are active in such funds, such as Deutsche Asset & Wealth Management, JP Morgan AM or Swiss & Global AM, are amongst those which are attracting more deposits (see table).
The leading management company in terms of new deposits was BlackRock, with Euro 885 million. “These results demonstrate the strength of our global platform which allows us to offer innovative solutions in any asset class, in any investment style or in any geographical region. Such flows also reflect greater investor confidence in the recovery of the global economy”, says Armando Senra, CEO of the aforementioned management company in Latin America and the Iberian Peninsula.
The question which follows the semester’s figures is whether this rate of growth in foreign CIIs marketed in Spain can be maintained. Some market sources believe that it will not remain the same in the coming months, due to the mark left by the falls in emerging market bond funds which had been set up as an alternative to conservative funds, and which will cause further rejection by investors in the coming months. Thus, some experts talk of a slowdown in inflows from here to the end of year, but are more optimistic regarding their evolution in the long term. “It is important for the industry to grow as a whole, both the domestic and international fund management companies, to avoid cannibalization preventing the sustainable growth of companies,” says an expert.
INTERNATIONAL ASSET MANAGERS WITH MORE INFLOWS IN SPAIN. Second Quarter 2013
|Asset Manager||Net inflows (Euro million)|
|Franklin Templeton Investments||716|
|JP Morgan AM||422|
|Swiss & Global AM||257|
|Deutsche Asset & Wealth Management||239|
|Source: Inverco. Estimates for June 30th, with data from 24 asset managers with Euro 45.5 billion in AUMs.|