The Spanish investment industry saw its overall assets under management (AuM) fall by just over 2% by the end of February, according to data from the country’s local funds trade body Inverco.
Echoing patterns seen across the world, Spain’s funds saw their biggest dip since 2018 as total AuM dropped to €271.3 billion.
Although a small player in the European funds universe, the country is still seen as a key market by players such as Amundi and Pictet, and has been experiencing a generally strong trajectory of growth over the last ten years.
But the Spanish funds industry can be fragile in the face of external influences. What could really hurt fund distribution is the market environment, according to Philip Kalus, founder and managing director of Valencia-based research firm accelerando intelligence.
“Once the going gets tough,” he says, “banks will move very fast to switch where the money is. They’ve done that a few times in the past, and it can really put a stop to growth.”
“In Spain, we see slightly higher sensitivity towards volatility than in other more mature, larger markets – and when people get nervous in Spain, they can be very quick to reallocate their money. The end of a bull market and significantly increased volatility can really harm the Spanish asset management industry.”
February saw outflows across all asset classes except ‘mixed fixed income funds’ which experienced “notable growth” with over €3.5 billion of inflows, continuing a trend seen in January.
“February was defined by mixed behaviour in the equity markets,” Inverco said in a statement. After three initial weeks of “notable” flows, uncertainty caused by the coronavirus took its toll and investors rushed to withdraw their cash from funds. The country is now on lockdown, following president Pedro Sanchez’s declaration of a state of emergency.
Cautious mentality
Earlier in February, Funds Europe spoke with a spokesman at Unigestion for our March issue. He highlighted that the current economic environment, characterised by ultra-low interest rates, is a challenge for Spanish investors. “They tend to adopt a cautious approach and as a result, have focused on fixed income,” he said.
While the main investor profile in Spain remains conservative, the overall landscape is experiencing a small but fundamental change. Data from Observatorio Inverco shows the number of conservative investors has decreased from 65% to 55% since 2015. Meanwhile, in the same timeframe, the number of moderate investors has increased to 39% of the total.
Find out more about the Spanish investment funds industry in the March edition of Funds Europe.
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