“In Spain We Have The Funds With The Worst Profitability And They Are The Most Expensive”

Antonio Banda 2

Antonio Banda, CEO of Feelcapital, has already warned of the risk posed by the transposition into Spanish law of the Brussels rule that will allow the entry of pan-European funds. The rule, which comes into force next March, is “the great danger for Spanish fund managers”.

Q: Following the modification of the taxation in pension plans, you commented that the real danger for national fund managers was the arrival of pan-European funds, why?

A: The regulation on European Pension Funds comes into force on March 21 and implies an opening of borders for European Pension Managers.

Q: According to the latest reports, the average commission for funds in Spain is 1.20% Wiill the commission for pan-European funds be much lower still?

A: Spanish funds are limited to 1.5% including investments. In Europe, pension plans are below 1%, and employment plans are at 0.20%.

Q: In Morningstar’s European ranking, Spanish funds are at the bottom. How badly are we doing?

A: We have the funds with the worst profitability and they are the most expensive. The two things go together.

Q: Are Spanish fund managers so lacking in renewal? what are they doing wrong and what should this renewal be like?

A: They should think of the participant and not of their banking parent company. If they thought about the participant we would have a different industry.

Q: Is it more profitable to buy a government bond and not to mobilise it, or one indexed to the Ibex 35 than to invest in funds… do you get more profitability with your funds?

A: Mutual funds are without a doubt the best investment for an individual, they have tax advantages and there are more than 44,000 mutual funds available. I don’t understand what investors in Deposits are doing. Active managers can do better than their benchmark, that’s what you pay them for.

Q: Pan-European fund fees and expenses cannot exceed 1% of accumulated capital per year. There are parts of the industry that point out that “providing the kind of advice required by the PEPP Regulation involves a cost that will not be recovered if it is covered by that 1% maximum fee, which also includes the cost of manufacturing, managing, administering and distributing the product. What should be the expenses and fees of these funds?

A: The commission is an expense to be able to manage the fund. But this expense has been reduced by technology and management models, therefore a manager should take a maximum of 0.70%. The problem in Spain is not what the fund manager charges but what the distributors of the fund take, which is often double that of the fund manager.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.