The coronavirus crisis and the stock market crash that it has generated have made many wonder if the time has come to invest. Those who are thinking in the long term, with retirement in mind and doubts as to whether now is the best time to subscribe to a pension plan, are surely having a sea of doubts due to the situation of the markets at this time: both the stock market As fixed income has corrected, yes, but there has also been a rebound in recent weeks which, in the context of enormous uncertainty in which we are operating, may be making us doubt whether this is a good time to make a significant contribution to a pension plan.
What the large entities that manage more money in this type of product are clear about is that pension plans are medium- and long-term instruments, so there is no point in changing the investment profile or panicking due to a market correction. like the current one, since it should be recovered in the medium/long term.
The big ones by heritage
In Spain there are more than 300 pension plans available for the investor to choose, between products that invest in the stock market, in fixed income, or mixed, with a total assets of 116,418 million euros between all of them at the end of 2019, according to data from inverco.
Of course, the Association only takes pension plans and employment plans into account when it collects this wealth data, but does not consider other types of similar products such as plans linked to the world of insurance (PPA, PIA and Unit Linked). .
Neither do the Voluntary Social Welfare Entities (EPSV), a very similar product, but which until now has certain differences, such as being able to redeem it 10 years after the first contribution, have different contribution limits and also do not depend on the Ministry of Economy and Treasury, if not, in the case of the Basque Country, they do it from the regional government.
If the EPSV are taken into account to the more than 116,000 million total assets, we must add more than 20,000 million that would be distributed only among the 20 largest entities by assets managed with Kutxabank and Laboral Kutxa leading the ranking in this type of product, with almost 8,300 million euros managed by each of them, which would leave them in the top 5 asset managers.
CaixaBank is the entity that manages the most money in pension plans in our country, with 29,721 million euros at the end of 2019, according to Inverco. After her, BBVA manages almost 22,900 million and Santander is in third place with 9,755 million euros.
If the most profitable stock and fixed-income funds in the decade of each entity that is among the 20 that manage the most money in Spain are analyzed, notable differences can be seen. In the first case, according to the data collected by Morningstar, there are those who have managed to generate double-digit 10-year annualized returns, as is the case of BBVA with its BBVA Telecomunicaciones PP plan, which has achieved more than 13%.
ING has also done so, with the Orange Standard & Poor’s 500 PP plan that it sells through Renta4, it has achieved returns of more than 12% in the same period. Mapfre also achieves this milestone with its Mapfre América PP plan, which yields returns of more than 10% annualized in the last 10 years.
The other side of the coin is Cajamar Vida’s stock market pension plan, Cajamar Renta Variable PP, which has left returns of 0.34% over the decade. Others, such as the RGA-Renta Variable Global PP of Caja Rural, the Bankia Bolsa Internacional PP of the Madrid entity or the Abanca Variable PP, have done better than the previous one, but have not managed to achieve returns of 3% annualized in recent years. 10 years.
Regarding fixed income plans, the most profitable of the decade have been Caser Public Debt PP, from Grupo Caser, with an annualized 3.12%, followed by Deutsche Individual Coupon Premium DB PP, from Deutsche Bank, which It is marketed through Zurich Seguros, with 2.62% in the same period and in third place is Banco Sabadell’s BS Plan Renta Fija PP, with 2.5%.
A transfer to equities
In the current context, the largest entities and asset managers in pension plans advise their participants to advance their contributions at this time -and not make them at the end of the year- in order to take advantage of the recovery of variable income.
However, they are clear that, despite the opportunity that is opening up in the market, the risk profile should not be changed due to the fact that the world stock markets have undergone a historical correction.
In most cases, they trust plans that are already designed to adapt to the profile of each investor, not only because of the assumption of risk but also based on the time remaining until retirement, giving greater weight to variable income when it is more young and rotate the portfolio towards mixed and fixed income and money towards the end. However, considering that the debt has even led to losses in investors’ portfolios in the face of historically low interest rates, it is a statement that is increasingly difficult to sustain.
“In recent years we have introduced the idea that if the term is long enough, you must have a mix with more potential for profitability than in the past”
Joseba Orueta, CEO of Kutxabank Gestión, explains how the exhibition has changed in recent years in this regard. “We recommend a route with products, if you are younger and have more knowledge, more focused on variable income, which is being replaced as time goes by with fixed income,” he indicates, but adds how “in recent years, working With clients, we have introduced the idea that, if the term is long enough, you should have a mix with a greater potential for profitability than there was a few years ago,” he explains.
This has translated for Kutxabank into more weight in the stock market compared to years ago, a process that has accelerated in the last five years due to the 0 rate environment. “Several years ago, the largest product for us had 15% income variable,” explains Orueta.
“If you have a sufficient period to achieve long-term profitability, if you are not in a disposition period, our discourse has been focused on having more equities and there has been a transfer in pension plans,” he continues. “Now the return expectation in fixed income is limited and you have to look elsewhere,” she explains.
Is it time to buy?
VidaCaixa, the largest pension plan manager in Spain with assets under management of 29,721 million euros, is confident that “if the investment is maintained” at this time “it will be possible to participate in future market recoveries. It is right now when You have to stay calm,” he said.
In his opinion, “the risk profile should not be changed due to volatility. It is essential that the investor define his profile based on the time horizon and the investment objective.” What the manager does recognize is that uncertainty generates, on many occasions, great opportunities. “For those savers who had planned to make an extraordinary contribution throughout the year, we consider that the current moment is more appropriate than waiting for the end of the year,” she concludes.
Alberto Vizcaya, head of Pension Plans for the Individual System and EPSVs at Santander AM in Spain, points along the same lines and considers that “pension plans make extreme market situations such as the one we are experiencing an opportunity to enter at lower prices. cheap.
This is only valuable if we maintain or increase our clients’ risk exposure, in no case reducing it. However, not all clients can withstand market situations such as those experienced in recent months and decide to reduce the risk of their investment”.
Although not all the large plan managers agree with this vision. Joaquín García Huerga, director of Global Strategy at BBVA Asset Management, assures that “the stock markets have not become cheaper” and that after “the collapse in March they have returned to a demanding area of valuation”.
Not everyone thinks the same: “The stock markets have not become cheaper; they are once again in a demanding area of valuation”
In his opinion, “we are not facing a historic situation to buy the stock market” and it will not be until the end of 2021 when “the benefits of the companies that make up the stock market indices will recover the levels of 2019”.
For Javier Lendines, general director of Mapfre AM, proof of the lack of visibility that exists now is that “only a third of the S&P 500 companies have given guidance (or strategic objectives)” for this year and “we will have to wait Let’s see how the macroeconomy is reopening”.
Of course, Lendines acknowledges that plan managers “played the range” during the March correction, at which time they “increased exposure to equities” to return to being “neutral” today due to uncertainty.
panic control
In fact, from Renta 4, Francisco Palomino, investment advisor, believes “the worst thing” that a participant can do at times like the present “is to give up and undersell” with the market still at a minimum. This statement would be valid, says the expert, for the stock market, but also for fixed income, even taking into account that the spreads have tightened in recent months and offer a little more profitability. Renta 4 Gestora advises its clients to “maintain regular contributions” to their plan.
Along the same lines, Banco Sadabell acknowledges that this is not the time “to make portfolio movements.” Its managers are recommending to participants “patience and respect time horizons; diversification and perseverance, in entries and exits”.
From Bankia they do not advise changing the investor profile at this time either
Investors’ doubts are centered, as Pablo Hernández, Bankia AM’s commercial director, acknowledges, on whether “their plans will recover to the levels of the beginning of the year”, although as they are “long-term” products, it may be possible to wait “a while” to get to see it. The Bankia manager does not advise investors to change their profile at this time either.
But far from what it might seem, Santander AM, based on Inverco data, points out that the participants instead of fleeing have wanted to take advantage of the market falls. “Looking at the data for the first quarter, and comparing them with those of the same period of the previous year, benefits have remained at the same level and contributions increased by 20%, which makes us think that pension plan participants are not have allowed themselves to be carried away by panic”, Vizcaya sentences.
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