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.