Passive management has a testimonial presence in Spain. With a volume of managed assets slightly higher than 63,000 million, which represents 32% of the total assets of international managers in Spain, to which another 200 million must be added from two Spanish vehicles, the ETF and fund market. The indexed files are still small in size. The positive side is that in recent years it has experienced a significant increase, doubling its share from the 16.2% it recorded at the end of 2017, according to Inverco data. The development of automated management has contributed to this growth.
Among the ‘roboadvisors’ – as it is known in the jargon – that operate in Spain, is Finizens, which in 2023 has managed to make a profit for the first time since it began operating nationally in 2017. With the forecast of surpassing this With 400 million assets under management, the firm specialized in fund portfolios and indexed pension plans has reached 20,000 clients. Its co-founder and CEO, Giorgio Semenzato, admits in an interview with ‘La Información’ that there has been dissemination work behind it, an arduous task considering that Spain is a highly banked country in this regard. However, he is confident that it can continue to gain ground in contrast to other surrounding countries and the United States, where the degree of penetration is greater.
As an ambassador of passive management, which as a general rule uses lower commissions to attract users, he defends that the most appropriate formula to optimize savings is to ignore ‘market timing’. “There are people who do not accept that the best recipe for maximizing long-term investment is to do nothing,” he argues. Under this premise and with the condition that investment entails volatility, he admits that for next year no changes are planned in the portfolios after the pause in interest rate increases, which implies the decision to “do nothing “. “There is demonstrable evidence that people fail because it is difficult to understand the markets in the short term,” he maintains.
“People fail because it is difficult to understand the markets in the short term”
With a long-term approach, he assures that the best way to maximize profitability is through patience, “because in the short term the market is unpredictable.” He focuses on financial education, “a fundamental factor” before launching into investing. In this sense, he attributes the lack of pressure from Spanish clients to the fact that the remuneration of bank deposits is not at the level of 4.5%, the rate at which the reference is currently. Take the United Kingdom as an example, where they have already reached 5%, a situation that has been influenced by the fact that the investor is “more comfortable” and does not allocate most of the savings to bricks, understood as such, a home.
Instead, he advocates REITs, the equivalent of Socimis that, in his opinion, offer “more interesting” returns. “The average global investor is conservative for a simple reason. Human beings have more aversion to losing ten euros than to stopping earning them,” he says, adding that the greater development of financial markets in Anglo-Saxon countries has also been influenced by fact that they do not have health coverage or a public pension system as extensive as the Spanish one.
Based on these conditions, Finizens has six different portfolio models that adapt to the level of risk willing to assume. In this way, model 1 is 100% fixed income and model 6 is 100% variable income. The latter was launched last July with a veto, so only very specific profiles can access it. The reason for this implementation is that the majority of its clients (60-70%), whose average age is 41 years, are positioned in levels 4 and 5. “Many clients asked us for a product with only a bag , because the maximum exposure we offered reached up to 80%. We have waited a while until the market was ready,” he emphasizes.
The most aggressive portfolio of the participating group by Mutualidad, Axon Partners and EVO, among others, offers a 4.5% return, with the average of their portfolios registering a 13% return. Semenzato is optimistic at this moment, which he considers transitional. “We are optimistic for a mathematical reason. The lower the valuation of the multiples, the more likely it is that the returns will be higher in the future,” he points out, while stating that he is confident that “the expected returns in the next decade will both for debt and for the stock market are higher after the disastrous 2022”.
