Last updated: 17:07 / Monday, 13 January 2014
Interview with Raimundo Martín

Mirabaud AM Seeks its Niche in Latin America and Aims to Reach EUR 1bn in Spain

Mirabaud AM Seeks its Niche in Latin America and Aims to Reach EUR 1bn in Spain

Raimundo Martín commences the new year 2014 aiming to increase recognition for Mirabaud Asset Management, the firm which he manages in Iberia and Latin America, beyond the private banking business for which the Swiss group Mirabaud is mainly known. This recognition will open the doors of the Spanish and American markets, which he defines as "very competitive" and in which he has been working to position his company for about a year and a half. Although ambitious, Martín faces this challenge with the same blueprint which identifies Mirabaud, a long-term vision which allows him to proceed patiently but firmly. “It is important to define our company clearly and position ourselves accordingly,” he explained during an interview with Funds Society.

Therefore, he defines his firm’s current status within the Spanish market as “in the process of positioning” and is aware that it needs time to assert its funds’ track record in order to reach a “decent market share” in about three years, which he places at EUR1 billion in terms of assets. And all in a scenario in which the fund industry “will continue to grow but it will take years to return to pre-crisis levels.”

Meanwhile, he is looking for a niche for the opening of the company in Latin America. “The Latin American market is very large and offers excellent and varied opportunities. We are exploring them, and when we find them, we will work on them and employ all the necessary resources,” he said. Although this development is still in its infancy, and Martín does not as yet have an asset target in figures or any offices instituted, he can already speak of a twofold strategy.

On the one hand, Mirabaud AM steers towards established markets such as Chile, Peru and Colombia, working with insurance companies and fund managers already investing their pension fund portfolios abroad. The management firm is about to sign a contract with a local representative for these three countries. On the other hand, to markets where their boutique nature and their flexibility allow growth, such as Panama or Uruguay, where they work directly with agencies which place customized orders and for which Mirabaud AM creates private label products. Overall, it has much to do with family offices and private banks, because it fits in with the business of their own group.

And finally, he is analyzing the Brazilian market and potential partnerships with local management firms, after ruling out Mexico, where he thinks there is no place for his company yet. In these markets, in addition to asset management, he is also offering consulting services.

Investors’ Appetite

“Investors in the region have an increasing need to invest abroad, and wealth creation has outgrown the narrow local markets. Therefore, they need better tools to invest externally,” he explains; this provides an opportunity for institutions that offer both interesting products and knowledge on how to invest or manage the risks. According to Martín, the appetite in the region is mainly directed towards high yield debt funds and emerging markets, while in markets like Panama, private banks prioritize the preservation of capital.

In Spain the demand is slightly different, with investors seeking exposure to the Spanish stock market or convertible bonds, but also to high yield, while the interest for emerging markets is gradually returning. In fact, Martín believes that 2014 will be a good year for stocks (including Spanish) and more complex for bonds, although the high yield offers are attractive thanks to coupons. He also believes that it is the right time to enter emerging markets after the sharp correction suffered, with active management looking for quality companies. The directional alternative management (the option of the management company) is also interesting at the moment, since historically, own products have captured 80% of the market rises to 30% of market falls.

The Advantages of Being Boutique

In recent years the company focused on its product range in order to concentrate on those which add value: Spanish, Swiss and British equities (with local managers) and also emerging and global equities. In fixed income it opted for high yield and convertibles and has recently launched a strategic asset allocation in fixed income fund, which had a very good reception; having hired renown managers from large institutions such as BlackRock, Aviva or Crédit Agricole to manage those products, “automate everything, but for the rest you need talent,” he argues, hence the company’s continued recruitment policy. Mirabaud AM thus fulfilled its wish to combine the advantages of a boutique, in terms of flexibility, customer proximity and independence, with management teams which in the past belonged to large fund managers.

Martín believes that the firm’s presence in Luxembourg as well as its boutique nature with the support of a private bank with 200 years of history will help to achieve their objectives both in Spain and Latin America. The acceptance of that boutique nature has been very positive in markets such as the Spanish. “Following the financial crisis, independence, transparency and a customer-minded approach are highly valued,” he said, adding that in Spain there is room for these institutions.

Martín envisions a market in which there is room for both the large management companies and the boutiques, while there will be consolidation moves in the medium-sized institutions. As for international management companies in Spain, he firmly believes that some of these companies, regardless of size will no longer establish offices, but many will register their products and will have local distributors (as is the case in Chile for example). “The institutions which are distributors of third party funds, will not only represent small and medium sized institutions, but large companies also,” he predicts.