Ripollés: “ESG funds have proven to be more profitable and less volatile”
Ripollés focused his speech on MAPFRE’s commitment to sustainable investment and reviewed the main ESG funds held by the management company: MAPFRE Capital Responsable, MAPFRE Inclusión Responsable and MAPFRE Good Governance. These three funds cover the three topics to which the acronym ESG refers: environmental, social and governance. “We are seeking long-term profitability that is not just financial. Institutional investors, as well as private individuals after this pandemic, will seek this more sustainable return,” said Ripollés. “These funds are more profitable, less volatile and have performed better this year than their benchmarks,” he added.
It is precisely this boom that is occurring in relation to this type of fund that has also increased what is known as ‘green washing,’ namely, products that are sold with the ESG label but that are not actually such. In the case of MAPFRE, which joined the PRI in 2017, it was decided to seek an alliance with an expert in the field. This is why, two and a half years ago, it took over 25 percent of the capital of La Financière Responsable (LFR), a French boutique that has been exploring this issue since 2008. In fact, two of these MAPFRE funds are managed together and have their own methodology applied to ensure that the companies entering the portfolio actually meet the sustainable criteria. This differentiates MAPFRE AM from other management companies, which are based on external labels and methodologies.
Jonathan Boyar, for his part, reviewed the firm founded by his father by focusing on what they consider to be of the greatest value: the analysis of forgotten values. In fact, MAPFRE focused on this expertise and, together, they launched a fund on the market: MAPFRE AM US Forgotten Value, a US equity product that focuses on companies undervalued by the market. As Boyar explained, his analysis is based on identifying values that are outside the focus of the investment community, for example due to having a complex capital structure or because they are in sectors duly considered unattractive. During his speech, Boyar hinted as to the main methodologies used in their analysis, such as the business value method and the hidden asset approach. “Finding cheap stocks is simply the first step, but you need a catalyst for their revaluation because, otherwise, you fall into a value trap. When we have an idea, we need a story, a reason why the stock can rise for a reasonable period of time. We are patient, we can wait two or three years to show that our hypothesis has been fulfilled,” Boyar explained.