suddenly difficult for mass investmentperson in charge manager OppositeJuan Aznaroptimistic about saving and third parties net deposits of 1,340 million euros within two years, allowing us to exceed the strategic plan’s target one year ahead of schedule.
Mutuactivos has taken a big step in recent years and became the first independent manager of banking groups with its fund assets exceeding 7,000 million Euros. How did they achieve this? What are the leverages that enable your business to grow?
The biggest engine of growth has been the strong increase in assets managed for third parties, a primary target of the latest strategic plans. In fact, 66% of assets managed by Mutuactivos today originate from institutional investors, foundations, private banks, family offices and individuals, with only 34% of assets corresponding to Mutua Madrileña. In a complex financial year up to 2022, net deposits from third parties reached €740 million, adding to those obtained in 2021 bringing the deposits over the last two years to €1,340 million. This means exceeding the target set in the 2021-2023 strategic plan, one year ahead of schedule.
What does 2023 look like? What are your biggest challenges? How do you deal with uncertainty and still high inflation?
One of our goals is to increase the visibility of our equity capabilities. Although our consistency and results in the equity segment have also been excellent, the market continues to perceive us primarily as a fixed income manager. In fixed income, we will continue to focus on capturing the market’s window of opportunity following the historic adjustments of these assets in 2022. Another big challenge that we will continue to work on in 2023 is sustainability. To meet this effort with determination, we have combined human and material resources and integrate sustainability into our investment processes. Regarding the markets, several factors came together that had an impact on the exceptionally good performance at the beginning of the year.
We are having a very hot winter in Europe, which has a positive effect on energy prices, China is reopening its economy and the latest macroeconomic data points to a slowdown in inflation. Despite this, we think that central banks will continue to tighten monetary conditions even if inflation continues to decline, and corporate profits will remain under high pressure as it is difficult to transfer cost increases to prices in the slowdown environment. In this context, we prefer fixed income as an attractive source of income. The stock market should perform well over the medium term, thanks to reasonable valuations and less pressure from rates.
How will interest rate hikes affect you? The reality is that these continued rises make deposits a serious contender for snatching savings from the most conservative investors.
I don’t expect as fierce competition from deposits to attract savings a decade ago, mainly because bank balance sheets today are much healthier than they were then and there is no such urgent need to resort to retail finance. If the deposit fee is generalized, it will be for the purpose of seizing market share, not because of an urgent need, so I would be surprised to see products with atypical or artificially high returns.
And from an investment perspective, where are the opportunities now? What types of assets do you invest in the manager?
The change in the context of interest rates has significantly improved fixed income prospects, an asset where we are currently seeing good opportunities. We see the value in loans in general and subordinated debt in particular, where risk premiums are very high. We cannot rule out scenarios where losses may occur in the short term, but we believe that a well-diversified fixed income portfolio will yield interesting returns in the medium term. We take a more cautious view of equities. Stock market valuations are already driving interest rates growth, but we believe earnings forecasts are still overly optimistic. We are currently betting on growth and quality companies rather than circular companies. We like companies like Colonial, Inditex and Bankinter in Spain. And international companies like Carl Zeiss, L’Oreal, Kering…
“The pension must match the amounts contributed during the contribution period”
What legislative changes should be made to increase investment, especially in the current panorama of uncertainty regarding pensions?
The public pension system is under extreme stress, mainly due to the growing deterioration between the number of contributors and the number of retirees. Unfortunately, the latest reform continues without addressing the necessary changes. Not only has it dealt the final blow to the personal finance system, which has already shown great slack in recent years, but an increase in support for the employment system is not expected in an economy like Spain. The structure is largely made up of SMEs that do not have a real capacity to create complementary pension plans for their employees.
For me the surefire solution would be to gradually convert the existing defined benefit distribution system to a defined contribution system so that the pension received will match the amounts contributed over the duration of the contribution and this amount will be added to the profitability achieved during the period. this period. Apart from this, the tax regime of the benefits needs to be reviewed: In the case of a single perception or in each year, it does not make sense to tax it completely as if that income was obtained in the year in which the benefit occurred. years in which periodic payments are received.
What about the plan to provide access to unlisted investments? What exactly does it consist of? What perspectives do you have for the alternative assets market? Will they continue to launch new products in this area, as they did when setting up their first venture capital fund?
The inclusion of unlisted assets in our advisory and discretionary management activity stems from the belief that such assets include a diversification factor in any portfolio. It’s not a fad or a wave ride for us. We also believe the timing is very appropriate: The recent correction in most liquid assets will bring down the valuations of private assets, and the next two or three years will present opportunities that were unimaginable just a few months ago. That’s why we’ve expanded Mutuactivos’ activity program to manage unlisted assets. We have the capabilities and track record of Mutua Madrileña’s over-the-counter investment team and will apply it. knowledge a truly different value proposition compared to other alternatives on the market. The first is the launch of Mutuafondo Global Ventures I, a venture capital fund.
How do you see the future of crowdfunding? Will mutual funds continue to grow? Will there be more concentration in the sector?
I am very optimistic: there is always strong structural growth ahead of collective investment, regardless of the market situation, and will gradually increase the share of families in total financial savings. It is true that this growth was accompanied by high pressure on margins, so it can be predicted that within a few years the volume of assets managed in the collective investment will be much higher than what is available, but this will have cumulative consequences for the industry as a whole. similar to today. Industry concentration will continue: There are an excessively high number of organizations other than the largest executives, and some of them just aren’t big enough or have a really different business model. Without these qualities, they will have a hard time not only growing, but also surviving.
In recent years, Mutua has made several acquisitions in the market, both of which are private banking institutions. [Alantra WM y Orienta Capital] as fund managers [EDM y Alantra AM]. What are the keys to this inorganic growth? Will they continue to grow with new purchases?
All the entities we include in our environment have some common features: they are business models that complement ours; are organizations with strong brand awareness in their fields of activity; and most importantly, there is a high degree of cohesion with management teams. The creation of future value is not based on achieving cost synergies, but on providing these firms with the tools and resources necessary to accelerate their growth. Regarding new operations, we do not exclude that more may happen in the future, but we will only examine options that complement our current capabilities.
The manager started out as an asset management firm for Mutua Madrileña, but soon opened its products to individual investors (corporate and retail). How did they achieve this without having a branch network like banks?
The main feature of our value proposition, and therefore our growth, revolves around two closely related concepts: independence and harmony of interests. No one outside of the investment department decides which assets should go into our portfolio; Nor do we have a network that determines which product will be released, how much to sell, or at what price. The alignment of interests is clear when Mutua Madrileña is one of the main investors in our funds.
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Mutuactivos recorded a good 2022 in terms of pensions, which are under great pressure in both the public and private sectors. How did they achieve this? Do you maintain your growth expectations in this segment?
One of the goals of the 2023 Strategic Plan is to decisively promote temporary savings schemes precisely in groups and companies. And we take it. We closed 2022 with significant growth, despite the difficult situation and complex market environment marked by the recent tax reform, which has made individual plans less attractive. We support retirement management with a life cycle approach that takes into account the retirement horizon of the individual. The longer this period, the higher the proportion of risky assets in the portfolio; this ratio will decrease over time to avoid the risk of loss in consolidated equity for many years in the final stages of active life.
Source: Informacion
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