All against all in the battle for funds

Fears of a slowdown more pronouncedFears of a slowdown more pronounced

Manuel Moreno Capa | Generalist banks wanting to convert their small savers into investors who opt for fund portfolios; large banks who launch innovative online platforms to attract wealthy clients; small bodies who look for savers in funds which begin with contributions as affordable as 10 euros; independent managers who, with new types of funds, compete with bank financing of SMEs … It is a struggle of all against all, which investment funds have become the definitive weapon.

In the same way as banks have spent years selling insurance, the major insurance companies have strengthened their role in commercialising investment funds. Products which, ever more, are becoming key in any strategy to get savings, with returns close to zero, moving in search of acceptable performances. And to do so, there is no alternative to entering the market, above all equity markets. As operating in stock markets is not for everyone and requires time and adequate training, the best way to seek these returns is to go for investment funds.

Before the summer Caixabank surprised analysts with its powerful Ocean Now platform, designed so that its wealthiest clients can access more than 2,000 funds of 140 managers online. An offering which joins other similar bank projects, hoping that even their most exclusive clients, used to having a private advisor, will operate directly in the fund market.

But there are also offerings in the opposite sense: banks which compete in the savings account market and which, barely able to offer returns to attract new clients, opt for converting the most modest saver into an investor. How? Again, investment funds.

In May ING created its Orange Investment+, based on the passive management of funds, which replicates the indices of all the international markets. It focuses on any of the savings clients with the bank´s orange account. They should be clear that they can remain at least three years in this new investment product. As Cesar Gonzalez-Bueno (ING´s CEO in Spain and Portugal) recalled when he presented this product, in the Spanish market there are 880 billion euros in deposits and bank accounts which earn absolutely nothing, and so “have lost 18% of their value since 2003”.

In the same line, MyInvestor (a bank launched by Andbank España), has just set up a platform to invest in profiled fund portfolios and ETFs starting with quantities as small as … ten Euros!. This is to lower collective investment to the level of the street. The commissions for this service: 0.65% of the equity invested in the portfolios up to 50,000 euros and 0.55% of that in advance (which combines, logically, with those which the funds themselves discount day to day from their liquid values).

This effort by the banks to compete in the funds market coincides with initiatives in the other direction. Trea, an independent fund manager, is commercialising Trea Direct Lending. The president of Trea, Carlos Tusquets, told me that this fund is offering financing to small and medium companies who cannot get loans from their banks, almost always because the banks cannot lend them money because it would increase their risk with the companies beyond its limit. Although this fund still does not enjoy the fiscal advantages of traditional funds (something which does happen with similar funds commercialised in, for example, Italy), it is undoubtedly a useful tools for improving the financing of SMEs. It is also a way for fund managers to compete for the traditional credit market, monopolised until now by the banks.

More competition, more market and, as a consequence, more possibilities for the investor. This all against all is welcome.