French boutique Amiral Gestion entered the Spanish market two years ago attaining subsequently a 150% year-on-year increase in related assets through 2017.
The entry of Amiral to the Spanish fund market could be partly explained by the time its founder and president François Badelon spent living in Barcelona.
There, he studied the Spanish asset management industry to identify business opportunities, arising from the growing appetite among local investors for value-orientated funds.
According to Pablo Martínez Bernal, Amiral Gestion’s head of Investors Relations in Spain, one of the reasons behind the hitherto success in Spain, is that the asset manager’s value proposal was perceived as a compelling alternative. “If you present to many investors an investment approach they already understand with a few unique characteristics – our sub-portfolio strategy and our global focus despite being a boutique – and your funds happen to be in the first decile in terms of performance, good things might happen.”
Amiral Gestion, founded in France in 2002, has some 40 staff, of which 28 work as part of the asset management team based in Paris. Although the company has its headquartered in the French capital, it also has offices in Madrid – for commercial representation -and in Singapore, where the research activity takes place.
The boutique, which is fully owned by managers and other employees, is aimed half at retail clients and half at wholesale and institutional clients.
As of the end of February of 2018, it posted €4.1bn in assets under management – on behalf of European investors –, of which €3.1bn belong to its Sextant fund range, €550m to institutional mandates, and the remaining €350m to wealth management.
As for fund classes, Amiral Gestion invests around 18% in pure equity funds, 2% in fixed income funds and 80% in mixed funds. Its Sextant fund range comprises six funds designed to provide investors with long-term performances and limited risk.
Four of the funds belonging to the Sextant range are equity funds – the Sextant PEA, the Sextant Autour du Monde, the Sextant Europe, and the Sextant Bond Picking – all managed according to a sub-portfolio asset management approach. The Sextant Grand Large fund is managed by a committee that selects stocks based on their safety margins.
The sixth fund of the range, the Amiral Gestion Sextant PME fund, was hard-closed on 10 July 2017 after it reached over €250m in assets under management. Managed by Raphael Moreau and invested in European small-mid caps, the fund registered a 18.13% annualised average profitability having accumulated a return of 104.50% since January 2014.
Sextant funds’ assets are divided into sub-portfolios, each of them managed independently by one of the team’s managers, who have the freedom to invest according to their own convictions, or conversely to subscribe to the ideas of others, thus leading the funds to be concentrated in the team’s strongest convictions.
In this respect Martínez (pictured) adds: “Probably the biggest difference we have with other value-oriented managers is our sub-portfolio strategy that changes the working dynamic of the investment team, since people are independent managing their portfolio but have to convince their colleagues that their ideas are great. Therefore, ideas are more scrutinized and we have concentration in the upper level of our portfolios and diversification in the lower one, something that helps us to reduce the funds’ volatility.
In addition, the fact of having 28 investment professionals for just €4bn in AUM is something very rare to see. Looking for value has no secrets, you need as many brains and eyes as possible.”
VALUE INVESTING PHILOSOPHY
Martínez refers to asset managers of local origin that also pursue a value investing philosophy. However, he emphasises how the majority of them were not seen by Amiral as competitors, conversely, as peers doing something similar to themselves. “We try to collaborate with them whenever there’s a chance.
“We share a goal with them, which is to increase the sophistication of Spanish investors: making them understand the benefits of saving for retirement, while having a long-term approach and benefiting from volatility events instead of suffering from them.”
In contrast, it is the bigger financial groups that are considered the real competitors because of their large market share despite what Martínez suggests is their poor value proposition.
Independent boutiques with a value investment philosophy in Spain have only grabbed less than €10bn of the market so far.
“Better informed investors might be able to shift this status quo, so time should be our best friend. Our investment approach requires remaining focused on the long-term prospects of companies, rather than on the short-term trends or market patterns.”
Regarding the best place to find value now, Martínez marks out Asia, particularly Japan, South Korea, and China.
“Since we opened our research office in Singapore at the beginning of 2017, we have to say that the attractiveness of the ideas we´re finding in Asia are amazing. The US is pretty expensive and Europe is reasonably priced, so it is harder to find value there compared to back in 2014-2015.”
In Spain, the firm has found few companies to trade at attractive prices, so its funds have little exposure to the Iberian country. Baron the Ley, the supermarket chain Dia, Cements Molins and Técnicas Reunidas are the four Spain-based companies where Amiral Gestion is invested.
Martínez adds: “Since we are pure bottom-up investors, we do not seek to invest in any given country for macro reasons. We have found these four companies attractive for different reasons. In particular Técnicas Reunidas is a very cyclical business and we think we are close to the bottom of the market.
“Its reputation is excellent, it is a wonderful business with a top-quality service that has been hit very hard for the margin tension suffered recently, which should stabilize and rebound by 2019. We´re happy to wait and see the company increasing its backlog.”
When asked for the company’s goals for 2018, Martínez underlines Amiral’s desire to further expand its brand in Spain, focusing on big institutional accounts as a way to consolidate its volume of assets under management.
Regarding to potential expansions across new markets, the company plans to conduct a business development in Portugal, Italy and LatAm but operating from its Spanish office. Amiral aims also at expanding its business activity in Switzerland and Luxembourg from the firm’s headquarters in Paris. The company has no plans for opening offices in any of these countries in the short term.
Although Martínez recognises that Spanish investors are increasingly moving towards equity investments, he considers there is still room for improvement. While he attributes this increase partly to the distortions generated by central banks in fixed income assets, he also admits that not the whole rise arises from that fact. “Spain still has to do a huge catch up compared to other European countries in terms of equity exposure. It is not that Spaniards are more conservative than Germans, it is simply that our financial knowledge is lower.”
Looking ahead, Martínez feels very optimistic in terms of Amiral’s further developments in Spain, where funds inflows keep growing and independent boutiques are increasing their AUM, which draws a positive outlook for the French boutique.