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Madrid 2,266 EUR -0,01 (-0,61 %)

FINANCE | 04.14.2020

The keys to the success of the MAPFRE Asset Management portfolio

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In several articles published in MAPFRE’s financial newsletter, the importance of not getting overwhelmed by emotions in difficult market times such as the current situation has been noted. With almost the entire range of assets hit, quality of management becomes especially relevant, since the pattern for other crises tends to repeat itself and, therefore, opportunities will arise that must be exploited in order to ride the wave of recovery.

The portfolio recommended by MGP (MAPFRE Gestión Patrimonial — MAPFRE Asset Management) for conservative profiles is that which performed the best in March, according to the competition held by EXPANSIÓN and Allfunds. Since the beginning of the year, around twenty companies have responded to the challenge set by the newspaper and the platform to test their quality by actively managing mutual fund portfolios. In March, the losses of the MGP portfolio were at 4.29 percent, while the losses of the quarter stood at 5.61 percent. The manager has a highly concentrated portfolio of five extremely defensive funds.

“The ability to recover from the losses of your fund will, from this moment on, greatly depend on the quality of the management team that manages it and the flexibility with which it has acted in these trying times,” said Ismael García Puente, manager of investments and fund selector at MGP, in a recent article in the MAPFRE newsletter.

Even the most conservative investors have, therefore, seen their portfolio suffer significant losses. What to do in this environment? Extend the time horizon, i.e. longer-term investing in order to increase the volatility level of their portfolio in a very controlled manner. In this respect, MGP experts recommend global variable income funds that invest in quality companies with a large international presence. This will be the driver of the portfolio’s profitability, which will be based on a defensive position in fixed income.

Ampliar el horizonte temporal, es decir, invertir a un mayor plazo para poder aumentar de manera muy controlada el nivel de volatilidad de su cartera. En este sentido, los expertos de MGP recomiendan fondos globales de renta variable que inviertan en compañías de calidad y con gran presencia internacional. Este será el motor de rentabilidad de la cartera, que se sustentará en una posición defensiva en renta fija.

Therefore, “you have to invest in funds that would be less affected by a possible rate hike (either monetary or short-term funds),” explains Ismael García.

Finally, experts recommend completing the portfolio with flexible fixed income funds, where the manager selects the most attractive distribution by asset type and geographic area to “provide the portfolio with an extra return on profitability, especially in areas or assets where there is room for further rate reduction.”

·         Variable income: 20–25 percent

·         Short-term fixed income: 50 percent

·         Fixed income: 30–35 percent

·         Target volatility: Less than 5 percent

·         Time horizon: Minimum 18 months

One of the things MGP is betting on is a house fund, MAPFRE Capital Responsable, which combine the extensive experience of MAPFRE AM in European fixed income with the know-how of our French colleagues (LFR) who are specialists in Socially Responsible Investment. The benefits of this fund are based on the defensive approach of fixed income that serves to offset the part of risk that comes from the selection of companies in variable income. This is a mixed fund with a conservative bias, which will have a percentage in variable income that will be around 30 percent in European companies. By building and managing a balanced portfolio of European shares and bonds, the fund seeks to strike a balance between capital preservation and long-term growth. A framework is incorporated into the investment process which allows an analysis of the social and environmental impact of the companies related to the investment, as well as their governance. The objective is to favor those companies and entities that have a strategy focusing on monitoring social, environmental and governance criteria (ESG), under the assumption that these entities provide a more appropriate risk-return profile. In this manner, the fund will be considered an ESG investment.

Along with this fund, the Amundi 6 M R, listed by Morningstar as ultra short-term fixed income and which is down 1.66 percent for the fiscal year, and Nordea’s Low Duration Covered Bond, also short-term debt and which is down 0.4 percent in 2020, make up half of the portfolio. This is also complemented by two other funds from PIMCO and BNY Mellon.

“Now is when investors are really going to find out if they have someone to lean on, a financial advisor to support them at the most difficult stage. Someone who conveys transparency, confidence, security and strength, so that decisions can be made as accurately as possible and we can continue fighting in complicated times,” concluded Daniel Sancho, Head of Investments for MGP in a recent article in the MAPFRE newsletter.