In Q1 2017, Spanish investors have restored some trust into European and Spanish equities. However, they seem to be increasingly concerned about longer duration in the European fixed income universe, according to findings from the latest Natixis Global AM Spain Wholesale Portfolio Barometer.
Aiming to study Spanish investors’ decisions, Natixis has surveyed 89 model portfolios managed by the 50 largest Spain’s AM firms, with data from VDOS as of 31 March 2017.
One finding of the study is that overall Spanish investors are cautious about high risk events. Although the economic environment shows strong signs of recovery, investors express concerns about various issues among which remain political uncertainty, macroeconomic data mismatching expectations, low long-term yields, and inflation at a time the Fed estimates its interest rates will be around 3% by 2019.
Risk levels of Spanish portfolios are stabilising after a period of low volatility. Diversification and risk control are seen as key points, particularly for conservative portfolios.
Juan José González de Paz, senior investment consultant at the Portfolio Research and Consulting Group at Natixis Global AM, said: “On the first quarter of the year, investors followed a barbell strategy when managing the different risk profiles. They reduced equities in conservative portfolios and increased equity in moderate and aggressive portfolios.
“Performance was positive in all risk profiles during the quarter, helped by positive returns of both Europe and Spanish equities.”
The allocation to European stocks has been trimmed in conservative risk profiles while it was increased in moderate and aggressive portfolios.
Sophie del Campo, head of NGAM for Iberia, LatAm and US offshore, said: “Diversification and control of volatility continue to be two key aspects when it comes to investing in the current scenario.
“Risk management needs to be a top priority for the investors in order to meet their financial goals and regarding this, to have the help of a specialised financial advisor focusing on active management, is key.”
The study also found out that Spanish investors are taking a more global approach to fixed income. Until the end of March, the exposure to European fixed income was substantially reduced, while that to global, US and EM fixed income rose.
Portfolio managers have invested in short-term diversified funds in Europe and have sold longer term government and corporate funds.
Regarding alternatives, investors seem to have sought a less directional bias in conservative risk profiles.
“It seems that Spanish investors are seeking alternatives to the traditional fixed income. We believe that flexible fixed-income strategies and absolute return can add value to portfolios by offering diversification”, said del Campo.