Allianz to expand fund offering in Spain
Allianz is increasing its product range for Spanish investors with three new funds, at a time when Spain has “more doors open to foreign asset managers than there have ever been”, the company’s regional managing director says.
Allianz’s fund business in Spain stands at €2.2bn, consisting roughly of 85% of funds from fixed-income specialist Pimco and 15% of funds from equity management unit RCM.
It believes it can attract investors to the new products in spite of the difficult economic climate and uncertainty caused by Europe’s debt crisis.
Of the three funds, two will pay monthly dividends, a structure its regional manager for Spain & Portugal Jose Maria Concejo says is relatively new for Spain because of adverse tax rules on capital gains and the treatment of dividends in the past.
As a result of Spanish fiscal reforms, the tax system has been simplified and tax paid on capital gains is now the same across all financial products.
This has encouraged managers to launch new types of funds. Allianz’s range includes one run by Pimco.
The other is a European version of a US vehicle paying a monthly coupon.
Concejo says getting Spanish investors to subscribe to these funds will require time and effort educating them about the potential benefits.
“Local investors are not used to this sort of product. It’s a different concept,” he says.
The company will also sell a new Allianz volatility fund, domiciled in Luxembourg. Launched in Germany about two years ago, it believes this fund has built a sufficient track record to attract Spanish investors.
The market for equity funds in Spain is challenging. About 75% of fund investments in the country are in guaranteed money market and semi-money market funds.
This leaves only one quarter of the market for equities and alternative investments.
A COUNTRY OF SAVERS
Concejo says: “I always tell my boss, whenever I get the chance, that Spain is not a country of investors it’s a country of savers.
That makes a huge difference. Something like 90% of the market, or close to that, is invested in funds with a low volatility.”
Complex or high-risk products are difficult to sell locally. This partly explains Allianz’s success in selling the Pimco range of fixed-income funds, which Concejo says exhibit low volatility, good performance, a recognisable brand name and low-risk profiles that most investors are looking for. Pimco funds represents 85% of Allianz’s total business in Spain.
The Spanish investor sees the market like a department store, he says. Go to one of the big banks and a team will select funds for the type of investment you want to make.
Independent consultants and advisers have a much more limited role than in other European countries.
Like other foreign fund advisers and managers, Concejo says it has also been difficult to compete in the Spanish market when banks have been offering more than 4% interest on deposits.
“Why would you invest in a fund when you can get 4.25%, risk-free guaranteed by the government? You can’t get a better risk return product in Europe,” he says.
A new legal structure for independent financial advisers called EAFI, (Independent Financial Advisory Company) was introduced last year, and asset managers hope it helps to boost the role of independent advisers.
The legislation prohibits any person or entity from giving investment advice without both obtaining prior permission and being registered with the market regulator CNMV.
Concejo says this is an important development because until in 2010, 95% to 96% of funds were sold through banks, which advised the client on what to buy.
In theory, investors can now seek a broader range of advice across a wider choice of investments, although how many will choose to do that is an open question.
However, private clients seem more disposed to ask their banks for information on specific funds and investments they are interested in, whereas in the past they would simply have asked the banker’s opinion.
Now clients have access to a wider range of options, there is more attention being paid to funds’ quality and performance. As a result, the market is becoming more open to foreign managers.
“There are more doors open to foreign asset managers than there have ever been,” Concejo says.