CaixaBank, BBVA and Santander control 77,431 million euros of investment funds distributed through discretionary management, according to data provided by Inverco, at the end of June, which represents three quarters of the money that is channeled through this business segment, one of the most promoted by the managers of financial institutions in recent years, along with independent advice.
This dominance over discretionary portfolios even exceeds the market share they monopolize in the investment fund industry, since between the three banks mentioned they dominate 54.58% of the assets in these collective investment vehicles, which accumulate a total of 302,321 million euros, with data for August.
The rapid growth of discretionary portfolios has come at a time when savers had a very limited supply of appreciation for their money, during the long decade of near-zero interest rates that central banks have just to settle a few months ago to try to curb rampant inflation.
In addition, the entry into force of the Mifid II directive also encouraged this segment, by introducing more transparency in the rates applied to financial products and forcing to expand the offer of third-party products available to customers.
In this way, the traditional deposits, which were the most commercialized products among the most conservative investors, gave way to investment funds as a way of retaining customers and making them loyal. And the discretionary portfolios were the instrument through which this retention was channeled, by charging a double layer of commissions: first, that of the portfolio management itself or explicit advice and, secondly, that of the funds included as underlying of these portfolios.
, apart from including funds from more specialized third-party international managers. But according to the latest data from Inverco, the estimated figure for the volume of assets managed through portfolios already reaches 109,000 million euros, with data at the end of the second quarter, 9% more than in the same period of the previous year. And of this figure, 67,784 million correspond to national funds and 9,317.4 million to international funds from Spanish managers, especially financial entities.
Being products intended for discretionary portfolio management or advice, they have so-called clean classes, which imply a lower cost than if a client wanted to contract one of these funds separately, as required by European regulations. But the inclusion of some of these funds does not mean that they are the most suitable due to revaluation for the participants, since in many cases they belong to categories where international managers or other Spanish firms have more experience.
Commission increase
All this has resulted in an increase in the remuneration received by financial institutions for fund commissions. In fact, according to the latest data registered by the National Securities Market Commission (CNMV), corresponding to 2021, . Santander, BBVA, Sabadell, Bankinter, Gescooperativo and Mutuactivos raised their average commission year-on-year, while CaixaBank, Kutxabank and Unicaja reduced them. In fact, the bank chaired by Carlos Torres and the entity led by Ana Botín placed them above 1%.
This has meant that the income received by managers, in general, from fund commissions has risen 18% last year compared to 2020, to a total of 2,800 million euros. For financial institutions, discretionary portfolio management is such a juicy segment that they have even reduced their dependence on the products of international managers, which shows how bank managers are seeking refuge in their own investment vehicles in a year of high uncertainty as 2022 is turning out.
Hence, despite the paradigm shift introduced by the rate hike in the remuneration of liabilities again, it pays for entities to transform less conservative savers into long-term investors.
division of the cake
Of the three large managers, CaixaBank AM controls the largest portion of the discretionary portfolio management pie, with 44,962 million euros. The Catalan entity has two large ranges of portfolios: those grouped under the Master brand, which for advised clients implies a minimum initial investment of 6,000 euros and Smart Money, aimed at a client profile more familiar with new technologies and that seeks to compete with the robo-advisor firms that have appeared in recent years in Spain. Hence, your minimum investment is 500 euros.
Precisely one of these automated managers, Indexa Capital, with 1,342 million euros of assets, has become a serious competitor for medium-sized financial institutions, ranking among the main discretionary management firms by size.
For their part, BBVA and Santander, with 17,000 million and just over 15,000 million euros, respectively, have become important players in this segment, since if for CaixaBank this business segment represents almost 60% of its assets under management in investment funds, for the blue bank it means 39% of its equity volume and for the red bank, a third of its equity.
Kutxabank is another of the financial entities that has also made a strong commitment to this segment, having 10,521 million euros in discretionary management portfolios, followed by Ibercaja, which manages 4,285 million, and Sabadell, with 2,983 million euros.
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