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FINANCE | 06.18.2020

“ETFs have their place in the investment world, but I prefer active management”

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José Luis Jiménez, Group Chief Investment Officer at MAPFRE, held a digital meeting with readers of EXPANSIÓN (a Spanish economics and business newspaper) to try to guide them on where to invest in times of crisis. In total, he responded to 15 questions, including recommendations on investment in certain sectors, as well as by product type, such as, for example, sustainable funds or funds with ESG criteria, on which MAPFRE AM, the insurance group’s management company, has chosen to focus.

Jiménez believes that “saving is going to result from the crisis, as a way of protecting us from uncertainty.” The expert recalled that, in the medium- to long-term, equities are often the best asset, both directly and through mutual funds and insurance products.

“In the current context, I would recommend well-diversified portfolios, with prudent active management. Also mixed at 50 percent, like MAPFRE Capital Responsable, where socially responsible investment can support crisis resolution.” In his view, cash and fixed income do not provide much yield potential. “Cash can be a way of protecting assets, but in the medium- to long-term, if profitability is to be achieved, a certain level of risk must be taken,” he said. “With central bank measures, equities have become the most sought-after asset, even despite the incredible valuations of many companies. It is necessary to be very opportunistic with purchases and sales, because many possibilities are going to present themselves in the coming months,” he said.

With regard to regions, MAPFRE’s expert recognizes that they are “overweight” in the US, “but slowly we are increasing the weight in Europe, with a ratio of 60 percent:40 percent.” And he recognizes that positions will have to be adopted in emerging countries, but once the pandemic has passed.

With regard to specific instruments, Jiménez believes that “ETFs are a cheap instrument to invest in as they are a diversified basket of shares.” “They have their place in the investment world and we can use them on occasion to make some investments.” However, the expert prefers active management for four reasons: “When entering a market (IBEX or S&P 500, there are certainly sectors or companies in which I would never invest); I don’t think that giving weight to an asset because of its capitalization volume is the best argument; SRI or ESG criteria do not take precedence for the selection criteria and, even if we did not like or were against it, I fear that the ETF would remain invested in; and if it is fixed income, it is even worse because the most indebted companies are the ones that weigh the most.”

You can read the full text of the meeting (available in Spanish) with EXPANSIÓN here