FINANCE | 10.15.2020
MAPFRE AM Good Governance tops its category
But what are the keys to the success seen by this fund launched at the end of 2017? According to Ripollés, US companies understand good governance and it is therefore no coincidence that US firms account for 56 percent of the portfolio. It is also no coincidence that companies like FedEx, Amazon, Paypal and PagerDuty are the most heavily weighted. “The US is the king of good governance — it’s been applied there for many, many years. Activist shareholders certainly have a name for themselves and with just three percent of a company, they can overthrow a board of directors or force through a corporate transaction,” the expert said. As a result of the good performance of technology companies, the fund has an exposure of over 20 percent to this sector.
This fund, managed by Manuel Rodríguez and Thoman Nuggent, has a very clear investment policy and Cranfield University provides support in the careful selection of companies that meet these good governance criteria. “We do not invest in companies where accounting is opaque, which may be at risk of manipulation, or in companies for which qualified audit opinions are issued. We also avoid related-party transactions, which involve shareholder crossover — and unfortunately this is something that happens a lot in Spain,” explains Ripollés. Conversely, preference is given to companies with a stable shareholder structure, those with a reference shareholder—a controlling shareholder—that looks at the long-term and creates value. Therefore, the favorites are first-generation family business, “those that have been around a few years and have been able to weather several crises.” At the same time, we look for a clear valuation of assets, the amortization policy, the valuation of inventories, provisions and contingencies, and traceability for income and expenses.
MAPFRE is the main investor in all MAPFRE products, whether liquid or alternative. And the same is true in this case. When the fund was launched, MAPFRE provided seed capital of 30 million euros and the equity currently already exceeds 85 million. “When MAPFRE launches a proposal to the market, the company puts its money where its mouth is. It is important because socially responsible investment and investment with ESG criteria are critical for the company, because this has always been in its DNA,” the management company’s Institutional Sales Director explained. “Given the need to be sustainable as an insurance company, making an impact and being present in matters of social, environmental and good corporate governance, we had to implement them in mutual funds,” he concluded.
Click here to see the whole speech.