Exporting local talent

clock
Exporting local talent

Abante Asesores Gestión has become the first Spanish asset manager to use the European passport to manage an investment vehicle domiciled abroad – in this case Luxembourg.

This has come through implementing control as manager of the Abante Global Funds Sicav; a vehicle launched three years ago that now claims some €300m in assets under management.

“International investors are more familiarised with Luxembourg products than with Spanish products. In practice, both are relatively similar, but a fund in Luxembourg has become the reference. If you want to be able to distribute products outside Spain, you must do it as a Spanish product marketed through a Luxembourg vehicle,” says Joaquín Casasús (pictured), managing director of Abante Asesores’ asset manager.

“As we grasped that reality, and we have now a volume and track record, we wanted our Sicav in Luxemburg to be under the umbrella of our asset manager, which logically gives Abante much more presence in international distribution,” he says.

Until November 2016, Abante acted as the investment adviser and Andorran firm Andbank, with an office in Luxembourg, managed the vehicle.

COST SAVINGS

The most immediate consequence of this takeover is cost savings, particularly for investors in the Sicav, as there is one less supplier in the chain, Casasús says. Additionally, the vehicle is now more closely identified with Abante.

Casasús explains that one of the main advantages of having a Sicav registered in Luxembourg is the supportive and efficient regulatory framework of a jurisdiction that has ‘bet’ on the fund industry.

Spain, in contrast, is years behind Luxembourg in regards to industry development and it “cannot play in that league” to reach international investors, Casasús adds.

“I’ve been working with Spanish asset managers for many years and I believe that local funds and Sicavs are great vehicles. Also, Spain is tremendously competitive in terms of costs. We are very good at administration and custody of these vehicles, and from that point of view, there’s nothing wrong with Spanish vehicles, but the volume of the industry in Spain is very small while abroad it is very large. It is difficult for foreign investors to assess the possibility of investing in Spanish vehicles,” Casasús says.

“In addition, issues of tax relating to Sicavs are still being questioned in Spain. It is not only that we are still discussing it, but also the legal uncertainty. This makes it impossible to attract investors to the industry,” he says.

Sicavs in Spain face increasing legal uncertainty as the country’s ruling political party has proposed particular legislation affecting this type of investment vehicle, which has become associated with tax avoidance strategies designed for wealthy individuals or families.

The conservative PP party has suggested only those who own a minimum 0.55% share of a vehicle, based on a minimum number of 100 shareholders, will count as Sicav investors.

The proposal has been criticised by industry players who say the measure is going to raise the minimum investment to the point of limiting Spanish private investor access to local Sicavs, and punish genuine investment vehicles.

In Luxembourg, on the other hand, authorities are more pro-business, quick to implement new regulations and, above all, provides legal certainty and stability, Casasús notes.

“Thus, investors from Chile, Mexico or Asia, beyond Europe, are more familiarised with Luxembourg products as they provide them more security,” he says.

INTERNATIONAL REACH

Having a Sicav in Luxembourg may help to reach these international investors, despite the rivalry between an increasing number of asset managers.

“We are aware that the European market is more mature, with a lot of competition and many asset managers, but we think our products are very niche and may interest a number of investors,” Casasús says.

“We also believe that, in our case, the connection to Latin America is evident. The market is less mature there, but also the proximity to the Spanish language makes the value proposition of our managers very attractive,” he says.

Abante’s Global Funds Sicav has five sub-funds, including three signature strategies: the equity focused Spanish Opportunities and European Quality funds, managed by José Ramón Iturriaga and Josep Prats respectively, and the multi-asset Pangea fund, managed by Alberto Espelosín.

“In Spain we have very talented fund managers, but they have little recognition, nationally and globally,” Casasús says.

Abante has found some of these fund managers and invests in their products through funds of funds – some of these strategies are already integrated in the Luxembourg Sicav, contributing to “exceptional value”, Casasús notes.

LONG-TERM PROJECTIONS

In 2001, four co-founders created Abante, which currently constitutes 16 partners with a long-term investment commitment.

“Obviously this is an incipient project today; it’s a venture with many long-term projections. We think we should be able to distribute [our products] in many countries and reach many more investors,” Casasús says.

The asset manager cites “reasonable numbers” within its means, when considering growth prospects for the next few years. Current AUM is some €2bn and the firm has almost tripled its managed assets since the peak of the financial crisis in 2009. In the past seven years, client number have increased from a bit over 2,500 to more than 5,700.

“When we founded Abante 15 years ago, one of the main assets we had – and that we continue to have – is time, which is why we have been able to grow organically and do the business that really interests us and in which we can bring value to our customers,” Casasús says.

The firm distributes its products to retail clients from Madrid and to institutional clients through fund platforms such as Allfunds Bank, Tressis Gestión and Inversis Banco.

Having picked its name from the Latin words ab and ante, which means going forward, the company has opened five offices since its formation: Madrid, where the asset manager and the back office are based, Barcelona, Zaragoza, Seville and Valladolid.

The asset manager based in Madrid follows an open architecture model, investing in funds of funds and with a clear bet on equity assets — 58.2% of AUM are invested in equities.

The group also operates a financial advice firm (Eafi, in Spanish), a securities agency, and a pension fund manager.

COMPETITIVE ADVANTAGE

With the recently acquired European passport, the company does not need to open an office in Europe to do business internationally and, through the Luxembourg Sicav, it can make local talent accessible.

“Our Sicav has sub-funds, and we can launch new funds when we think it is appropriate. It probably makes sense to create a Luxembourg version of some products we already have in Spain,” Casasús says.

He highlights the firm’s competitive advantage in the local proximity of its fund managers and their ability to explain their strategies.

“I’ve always thought that an important part of the success of a fund is that the participants understand very well the decisions of the manager, their motivations, their investment process and philosophy so, when things go wrong because the market is nervous, participants are confident in the strategy,” he concludes.

More on