BBVA Asset Management, the investment management arm of BBVA Group managing funds across Europe and Latin America, has adopted a decision-making framework with a central aim: to enhance objectivity while recognising that human psychology will always be a part of the equation.
At the heart of this transformation is Jaime Martínez, global head of asset allocation, who says the team has built a process that draws from behavioural economics. The team has developed a rules-based process guided by clarity and simplicity. Investment decisions are structured around two key horizons: strategic allocation, with a three- to five-year outlook focused on valuation; and tactical allocation, spanning one to nine months and shaped by more dynamic signals.
“Objectifying decisions as much as possible is key,” Martínez says. “It helps us mitigate emotional and cognitive biases, especially in today’s fragmented and volatile macro environment.”
“Easy to fall into emotional traps”
Martínez outlined three core pillars underpinning the asset manager’s approach to portfolio construction. First is strategic asset allocation, grounded in long-term valuation. Second is a disciplined tactical framework to manage short- and medium-term risks and opportunities. Third is security selection executed through the most efficient investment vehicles available.
Diversification across these return sources is central to BBVA Asset Management’s strategy, but so is keeping the process transparent and methodical. The asset allocation team uses quantitative tools not to override human judgment, but to reinforce discipline and consistency.
Tactical decisions, Martínez says, are vulnerable to behavioural biases. “During stressful market environments, it’s easy to fall into emotional traps,” he notes. “That’s why we use rule-based models for most of our tactical calls.”
Incorporating AI and machine learning has been part of that evolution. One of the first tools to reach production was a US Equity Scorecard model giving a short-term signal on the expected evolution of US Equities for the next two weeks.
“Since inception, it has consistently outperformed a passive approach,” says Martínez. A more ambitious project based on machine learning principles —a dynamic asset allocation model covering 21 asset classes— is currently work in progress.
The firm is also leveraging AI in its thematic equity portfolios, using clustering techniques to enhance construction. “Finally, we are also working with external providers on an early detection of emerging themes using AI,” shares Martínez.
“Objectifying decisions as much as possible is key. It helps us mitigate emotional and cognitive biases, especially in today’s fragmented and volatile macro environment.”
From climate benchmarks to alternatives
ESG is embedded throughout BBVA AM’s investment process, particularly at the security selection level. The firm has developed an internal ESG rating system that applies universally across all portfolios regardless of client type. Climate-related risks are also beginning to inform long-term strategic allocation decisions.
Institutional clients, often more ESG-sensitive, see further adaptations. “We’ve moved our equity benchmarks to climate transition benchmarks, aiming to reduce carbon footprint significantly,” says Martínez. “We’re also active in voting and engagement.”
Private markets and alternative risk premia are additional areas of focus for him as a fund selector, managed carefully to balance liquidity, transparency and complexity. For retail portfolios, the asset manager caps private markets exposure at around 3–4%, favouring investments with shorter durations and higher cash distributions, shares Martínez. Institutional clients have higher thresholds, with commitments of 8–15% being typical, he adds.
In alternatives, the fund selection team applies strict criteria to ensure only liquid, transparent and robust long-short strategies are included—particularly those with “very low correlations to traditional risk premia”.
Martínez’s academic engagement and involvement in EU-level investment initiatives also inform his work. “Staying connected to academia keeps us updated on industry developments and innovations,” he says. “It helps us contribute to the industry and support younger generations in developing investment knowledge.
Also, my participation in EU-level initiatives as an evaluator of projects helps me stay updated and acknowledge the most recent innovations in our industry.”
BBVA Asset Management has introduced goal-based model portfolios as part of its discretionary portfolio management, aligning with the broader industry shift toward scalable personalisation—’one of the most important strategic objectives for asset managers,’ according to Martínez.
Recognising and containing biases
The influence of behavioural finance can be seen not only in the asset manager’s allocation models but in how it selects managers and funds. The firm recently applied behavioural principles to redesign the governance framework for selecting private market investments. “We’ve addressed groupthink and improved both objectivity and accountability by rethinking how our investment committees are structured,” says Martínez.
This consistent, thoughtful integration of behavioural insight, ESG awareness, and technological innovation points to an investment culture built on evidence—not hype. For Martínez and his team, the future of asset management lies not in eliminating the human element, but in understanding it better.
The firm builds its investment approach on the belief that markets aren’t fully efficient—“and since they aren’t, we believe in active management,” says the head of asset allocation. The team also aims to enhance passive strategies wherever possible, he adds.
Other aspects of the asset manager’s approach include a disciplined focus on portfolio construction, seeking resilient returns rather than just high returns, with attention to managing potential losses. The strategy also emphasises cost efficiency and exploring alternative risk premia. “The key is to identify the essential ingredients of the assets to capture their profitability,” concludes Martínez.
