Guaranteed funds flourish amid redemptions

Spanish investors have been redeeming fund investments through the financial crisis, but one sector is managing to attract interest.

The Spanish guaranteed capital fund sector was the only sector to attract net inflows in 2011. The garantizados sector attracted net assets of €3.5bn over the year, according to figures from Ahorro Corporación.

All other sectors, including equities and fixed income, suffered net outflows as investors continued their withdrawal from mutual funds: a trend established in the wake of the financial crisis.

Overall, assets within the guaranteed sector rose by €4bn once market returns are included. According to Ahorro Corporación, the guaranteed sector is now the largest in Spain, accounting for 39.8% of all assets under management.

Seven out of the top ten selling funds throughout the year were guaranteed. The guaranteed sales table was led by InverCaixa, the asset management arm of Barcelona-based La Caixa. Its Foncaixa Estabilidad attracted €2.5bn in new money.

Guaranteed drop

Guaranteed fund tranche sizes have dropped considerably in recent years: €3bn was not uncommon before 2007, but in 2011, only LaCaixa was able to attract more than €1bn to an individual product. Bankia and BBVA Asset Management best-selling products took in €548m and €278m, respectively. Overall, 69 capital guaranteed funds were issued during the year (more than half the annual total, according to figures from Spanish regulator the Comisión Nacional del Mercado de Valores).

Other retail sectors suffered outflows as Spanish investors continued to withdraw from the mutual fund market. Many retail clients have exited in favour of plain deposit accounts. They have been attracted by the intense savings war being fought by Spain’s banks and mutual cajas in a bid to increase their own capital funding levels.

Within mutual funds, the hardest hit sectors were short and longer duration fixed income last year. They experienced combined net withdrawals approaching €10bn. Investors also withdrew €1.42bn from property funds as redemption windows opened during the year.

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