Mutual funds: security vs. profitability?
Mutual funds are a booming financial instrument, which generally offered high returns last year. However, the current uncertainty is increasingly calling into question the trend of recent years to replace more conservative options with riskier ones.
At the end of 2021, the estimated assets of investment funds and investment companies worldwide exceeded 61 trillion euros. To get an idea of the volume, suffice to say that it is equivalent to three quarters of the world’s GDP. In Spain, the figure reached 620 billion, 18% more than in 2020, and its profitability in the year as a whole exceeded 6%, according to data from Inverco, an association that brings together collective investment entities and pension funds in Spain.
In percentage terms, mutual funds and investment companies already represent 15.7% of the financial savings of Spanish families, a percentage that is only surpassed by Belgium among the large EU countries, with 17.4%. In Italy, they account for 15.1%, in Germany 12.7% and in France less than 5%.
This is partly explained by the fact that mutual fund holdings in Spain have tripled over the last decade. On the other hand, the investment horizon of savers in the long term (more than three years) has increased significantly in Spain from 35% to 49% in just two years.
However, we cannot lose sight of the fact that deposits and cash still account for most of the financial assets of Spanish households (41%), a percentage that is only surpassed by Portugal (48%) among the major European economies. In France, they account for 29%, in Italy 32% and in Germany 39%.
Different products for different investors
Worldwide, 47% of the assets of investment companies and funds are in equities, 20% in bonds and the remainder is divided equally between mixed and money market products, which invest in the short term in a given currency.
However, this distribution varies considerably from one country to another. For example, while equities account for 59% of the total in the United States and 51% in the United Kingdom, globally in Europe they account for only 34%. And there are also considerable differences in mixed products, which in Spain are the second most important, with 31% of the total, while in the United States they account for only 6%.
Over the last 15 years, Spanish investors tended to replace more conservative options with riskier ones. Thus, while in 2007 money market, fixed-income and guaranteed funds accounted for 64% of investment, in December 2021 they accounted for only 18% of the total.
Performance in question
However, this greater appetite for risk and variable returns does not seem entirely justified if we look at the long-term performance of mutual funds as a whole. An IESE study indicates that the average annual return of 562 funds that have been active in Spain over the last 15 years was only 1.91%. In fact, only 64 of these funds were more profitable than government bonds, and 68 of them had a negative return.
Moreover, in a context of rising inflation and economic uncertainty, in addition to the probable rise in interest rates by the European Central Bank and the U.S. Federal Reserve, doubts about the evolution of equities arise. For this reason, some voices point out that guaranteed investment funds can be a good option for investors seeking an appropriate balance between risk and return.
If you want to know more about superior options to make your money profitable, go to Guaranteed Funds. From 11Onze Recomana we propose you the best options in the market.
As the name implies, guaranteed funds guarantee all or part of the capital invested, as well as a fixed return over a certain period of time. This performance is generally linked to the performance of a benchmark stock market index, but which guaranteed funds offer the best performance?
Guaranteed fixed-income mutual funds can be a good option for investors who are happy with a moderate return in exchange for not having any surprises and not losing the money they have invested. On the other hand, equity or partial equity funds offer a good balance between security and return.
In guaranteed equity investment funds we have to look at long-term performance, as it is difficult for a fund to consistently repeat the top places year after year. Even so, we have to bear in mind that an investment fund may charge different fees for the different classes of units it issues. Subscription, redemption, and management fees can have a significant impact and drastically reduce its overall performance.
Most guaranteed funds have a high subscription fee of up to 5%. This means that just by buying the fund you lose 5% of the money invested. In addition, most have a redemption fee that has to be paid when the fund is sold in order to recover the capital. Management fees are not usually high, especially in fixed-income funds, or in automated managers and digital platforms that, with the help of mathematical algorithms, invest the client’s money in a way that does not require a human manager.
In the comparison table below, we compile some of the most outstanding guaranteed equity funds in the Spanish market. These are funds that do not guarantee future returns. Therefore, the comparative table that we show you is a compilation of the returns of the last few years, but not of future returns. Is it possible to achieve good guaranteed returns over 1, 3, 5, 10, or 30 years? If you want to know more about superior options to make your money profitable, go to Guaranteed Funds. At 11Onze Recomana we offer you the best existing options.
Comparison: Guaranteed Equity Funds
If you want to know more about superior options to make your money profitable, go to Guaranteed Funds. From 11Onze Recomana we propose you the best options in the market.
When you think of ways to manage your wealth, you’ve probably thought of investing in foreign companies, but dismissed it right away because it wasn’t clear to you how to go about it. Investing abroad can be a complicated task. Agent 11Onze Amadeu Vilaginés gives us an overview.
In a globalised world like the one we live in, it is normal that more and more people want to invest abroad. And the trend is on the rise. It may be that we see potential in a sector that is not very well established in our country, but which, on the other hand, is very important in Germany or the United States, which is why we are interested in it. Unfortunately, not everything is so easy: a process that could be simple, such as buying the shares of a company, in a market that is different from ours can be a challenge full of obstacles.
And why is it so complicated, especially for individual investors? For many reasons. The first reason that makes it difficult is the commissions. “The most normal thing is that our broker charges us higher commissions for investing abroad than in Catalonia,” the agent argues. In addition, and depending on the country in which we want to invest, we will have to take into account many other factors such as currency exchange rates, market volatility, legislation and legal security in each country, among others.
ADRs and GDRs, investment certificates
To solve all these difficulties, ADRs (American Depositary Receipts) are used, or their global version, the well-known GDRs (Global Depositary Receipts). But what are they? “Both are certificates issued by banks that represent the shares of a foreign company, but which at the same time are listed on our local stock exchange,” Vilaginés explains. In the case of ADRs, on the US stock exchange. And in the case of GDRs, on the stock exchanges of the rest of the world.
These certificates make life much easier for investors. “If American investors want to invest in a Chinese company, instead of making life difficult for themselves by investing directly on the Shanghai stock exchange, paying a lot of commissions and being exposed to currency exchange, they can simply buy a Chinese ADR on the New York Stock Exchange,” the agent explains. This would also mean that it would be traded in US dollars.
However, it is not all advantages. ADRs are still certificates issued by financial institutions and are therefore not exactly shares in the company to be invested in. “This means that some of them do not allow voting at shareholders’ meetings and there may also be liquidity problems compared to investing in local companies,” Vilaginés warns. It is therefore important to invest very carefully, and always with the advice of an expert. Want to know more about investing abroad? Just watch the video below.
Investing abroad: the role of ADRs / GDRs
Cryptocurrencies, also called digital currencies, are defined as a digital representation of a value. An intangible and decentralised means of payment that is growing at a dizzying rate. But are they a good investment? CEO Natàlia Cugueró answers this question in a new episode of Territori 17 of ‘La Xarxa’.
The ease of investing in cryptocurrencies and the headlines of Bitcoin millionaires make them increasingly popular. It is a global investment opportunity available to anyone. However, like any investment, there is a component of risk associated with it.
There are many cryptocurrencies on the market that allow us to invest in volatile and highly profitable assets as long as we are willing to assume a high risk, but there is also a lesser-known side of cryptocurrencies linked to the euro or the dollar, called stablecoins, which do not have this volatility and represent a less risky investment.
As with any other investment asset, the most important thing is to define what level of risk we are willing to take, and invest capital that we can do without. Natàlia Cugueró, CEO of 11Onze, explains all this and more in the podcast below!
La Plaça – Territori 17: Cryptocurrencies
We bring you a new financial concept: ETFs or exchange-traded funds. A complex product that has become a widely used investment tool for both individuals and professionals. We explain to you the key concepts.
The acronym ETF stands for exchange-traded fund. It is, therefore, a product that works like an investment fund, through which you can invest in different companies, sectors, and even in several countries, fact that offers the holder more diversification and flexibility to access markets.
On the other hand, the fact of being listed on the stock exchange means that ETF units are bought and sold through the stock exchange, following the same mechanism as shares. This can provide more liquidity to holders, since, unlike traditional mutual funds, buying and selling transactions can be carried out at any time of the day, within market hours.
The following training expands on the explanation to show us in more detail how this product works:
Learn what types of ETF exist in this video.
Investment trends 2021: ETF and ETF ESG
The Fundspeople report shows that ETFs have positioned in recent years as one of the investment vehicles most appreciated by investors, who especially highlight their liquidity, diversification capacity and costs, which are usually lower than in other conventional investment funds. In fact, the consultancy TrackInsight confirmed in a study that 57% of mutual fund holders have switched to ETF products for their equity investments.
Within this growing trend, sustainable investment comes into play. These are the so-called ESG ETFs, which are governed by environmental, social and corporate governance criteria. They attracted 45.5 billion euros in 2020, accounting for 51% of total fund inflows and thus outperforming traditional ETFs, doubling the figures of 2019.
Although on a global scale the impact of sustainable ETFs remains low, the investment trend continues to grow, and it is not ruled out that, as has happened with “green” government bonds, the increase in demand will lead to an increase in the supply of ESG ETFs in the coming years.
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11Onze makes available to its users the training courses that agents are giving to their colleagues. From cryptocurrencies and derivatives to macroeconomics: we learn as a community and train each other.
The 11Onze agents continue their training, and staff specialised in a certain subject share their knowledge with courses for the rest of their colleagues. This community training initiative began in June, and now 11Onze is opening it up to the users of La Plaça so that everyone can access this training in economic and financial matters.
If summer is a good time for training and learning new things, in the Learn section of 11Onze you will find 30-minute formation courses on very specific topics. We start with a first introductory chapter on cryptocurrencies with the agent Aitor Canudas. ETFs, invoice factoring, interest rate macroeconomics, asset classes or asset-backed loans, among others, will also be covered. The courses are taught by agents such as Marc Jara, Joan Benedicto, Nuria Rambla, Pilar Oltra, Albert Chic, David López, Sergi Colell, Jordi Sánchez, Jordi Oller, Amadeu Vilaginés and the aforementioned Aitor Canudas. Now, given their knowledge, they take on the role of trainers for their colleagues and the 11Onze community.
As always, people who watch the courses will be able to answer a questionnaire at the end to assess the knowledge they have acquired. And, depending on the result, they will earn Peles. A virtual currency, but one that will soon be very real for La Plaça users.
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11Onze Training Courses: Criptocurrency introduction
Behind 11Onze, there are 148 promoters who have committed to creating the first digital fintech community to revolutionise the relationship we have with money. Carles Juanico is a real estate consultant at IAD and one of the people who helped start 11Onze.
Interview of one of our promoters, Carles Juanico
Why do you think a community project like this is needed?
I think there is a huge lack of financial knowledge in this country. We have a very low financial level in terms of knowledge, and I am sure this community will help us know this world much better. And if, on top of that, it does so in an ethical way, in collaboration with people from our country, even better. Behind it, there are people who want to do things in a collaborative, ethical, and country-wise way.
What do you expect from La Plaça, 11Onze’s community?
I hope the expectations are met. May this be a community where we can learn from each other and be heard. That is what people want. We do not only want to do what is profitable, which is the most usual today, but that we all have benefits. And I have a lot of hope, because the competition is very low in this sense. There is enough talent in Catalonia, and we are proving it every day with leading companies in all sectors. Many digital entrepreneurs are coming to our country, therefore I am sure that we will do it well.
How do you think customers of financial institutions feel?
Very neglected. They treat us worse every day. They just try to sell us alarms, phones, and stuff. To get an appointment, you have to call; the staff is constantly changing; you do not know your manager… The only good thing is that, technologically, some of them have evolved a lot. But the customer service is a disaster. I hope to have a bank that supports me. A bank that is there to help me, not to kill me with commissions, when I apply for a mortgage, and that makes my day-to-day life easier. I want to be able to make my transfers, check my balances, and perform my day-to-day actions in a fast, agile way, so that when I need to talk to someone, I have someone to support me, answer my questions, and treat me as a person, not as a number. I do not want the bank to try to sell me whatever they want.
How do you think the real estate sector will change after Covid?
Seeing other countries like France, the digital will prevail. The human factor will always be there, but the contact, the way to get there will be completely digital. This will make traditional branches less important. People no longer go to shops or convenience stores. The same will happen to the real estate sector. I belong to IAD Real Estate, which is a PropTech organisation. I firmly believe in the digital world, in collaboration. Today we make all purchases online, we communicate online. The world has become global and communications allow us to be closer than ever.
What is your strength as an entrepreneur?
I have always liked entrepreneurship, initiative, creativity… I am a trained publicist, and creativity has always been my goal. I am from a generation that is not digital. We learned using the pencil and paper, and we have had to pull up our socks. I have done it with great pleasure, because I firmly believe in it. I see that is the trend: the new generations are digital, work at high speed, and learn very quickly. I have tried to keep pace since day one, which has not always been easy!
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Dr Xavier Palet became an entrepreneur at the age of 50 after a lifetime spent in healthcare management. He runs ICPA (International Care Patient Assistance), which assists foreign patients who need to use the Catalan health system. He managed the Juan XXIII Hospital in Tarragona and was the manager of the Hospital General de Catalunya. Now, he has decided to be one of the 148 promoters of 11Onze.
Why do you think a new Catalan bank is needed?
The “Catalan banks”, have betrayed us. They are no longer Catalan banks, we can no longer consider them. Having a new Catalan bank is fundamental. I think that sooner or later there has to be a Catalan public bank, 100%. But as long as this is not possible, let’s create a private one. We need it to be a bank free of the grasp of the Spanish deep-state. And 11Onze is this bank. It is essential that we create state structures.
Who do you think 11Onze should be aimed at?
Bearing in mind that more than 90% of Catalonia’s GDP is in the hands of the self-employed and small and medium-sized businesses, they must be a preferential client for 11Onze. But I also go further: why not have the Generalitat de Catalunya as a client? Or the Diputació? Or the city councils?
What do you think will be most appealing about the project?
That we want it to be a bank at the service of customers. A loyal bank, a faithful bank, a social bank, an ethical bank. That its sole purpose is not to make money. That all together we can build a much better and wholesome country towards independence. I think that the application, the tool that customers will be able to use to communicate with 11Onze and to be able to work, will also be surprising. I think it will make an important difference with the rest of the entities.
What do you think is your strength as an entrepreneur?
I am 66 years old. At 50, I decided that I had had enough of working for others and that maybe it was time to take the plunge, to take a risk, to start working for myself. And that’s how I set up my first consultancy, highly specialised in the world of health management, centred in economic aspects and above all with the economy management of hospitals for foreign patients. And I think that this has been my strength, knowing very well a very specific sector in a very underdeveloped market.
Xavier Palet explains the reasons for the need to create a Catalan bank.
“I would never have thought that a bank could fit so well with my values” Laura Carlús is an educator and works as a consultant and administrative manager. She admits that she has never been interested in banks because of their involvement in war conflicts and lack of empathy for their customers. In 11Onze, Carlús has found a project that fits her expectations about the values that a bank should represent today. She is one of the 148 main sponsors behind 11Onze.
What is the reason that led you to become one of the driving forces behind 11Onze?
With 11Onze I had a really incidental encounter, a kind of unexpected attraction. In a way, I felt very identified with the ethical values that this new bank contemplates. It’s true that I’ve never been interested in banks, mainly because they defend interests that I don’t agree with. Somehow, 11Onze has managed to reach a very emotional part of me and has reminded me of the bad treatment I have received from other banks. I am surprised at the possibility of finding a bank that fits my interests and that also bets on a powerful country; it is very exciting, really. I would never have thought that a bank could fit so well with my values.
What are the values that have attracted you most to the 11Onze project?
Many, but perhaps I would highlight working ethically for social convictions and not to extract more money from people. I think it is important for today’s banks to make a social commitment to the environment and to carry out a different kind of management that can reach people. Moreover, it is essential that these projects help in creating a more equitable society, that they help those who want to set up new businesses or projects, but also those who just want to live in peace. It is also important that there is room for initiatives involved in the sustainability of the planet. It is not a utopian idea to create a business with values and soul.
Why do you think there is a need for a Catalan bank with these characteristics?
Simply because it can do it. It’s not that we need it right now, it’s that we have always needed it, so I welcome it! With the pandemic and the economic crisis we are very disillusioned; I feel that the population is very discouraged and demotivated. Young people don’t see their future clearly and this can be a window of opportunity. It would have been great to have it earlier, but now is also an ideal time.
And in this sense, do you think Catalonia can have a powerful bank capable of being competitive with other existing banks?
Of course it can. We are a small country in a big world. We have the main potential, which is our people. The self-esteem of the Catalans is very high, despite the fact that we have been ignored many times.
Given the current banking landscape and how 11Onze are starting this project, what do you think will be most surprising?
I suppose the speed with which everything has been set up. When things are clear, everything is more agile and that is exactly what has happened with 11Onze. The advantage of this new entirely Catalan project is that, unlike other banking institutions with very heavy structures, 11Onze presents a lighter model from scratch and with very clear management criteria so that we can easily reach wherever we want. And of course, what will also be very surprising is the non-involvement in wars and other contexts that require a certain level of ethics. There is no point in worrying about armed conflicts in Yemen if my bank finances its continuity.
Would you invite other people to join the community?
I have been doing so for a long time. When you believe that a project is good for you and your country, it comes naturally to talk about it with acquaintances or friends. When I explain it, I am often met with fear or mistrust, but perhaps if we opened our minds and really stopped to think for a moment about the purpose of everything we do or what motivates us to continue, we would find that it is really easy to join 11Onze. In fact, it doesn’t take any effort.
What strengths would you highlight about Laura Carlús as an educator?
My honesty and transparency despite finding myself in situations that force you to be a bit more politically correct. I am proud to be politically incorrect when I have to and to be passionate about what I do. I embrace change with all the joy it brings.
INTERVIEW: Dr. Sun Rius. Among the 148 founding investors of 11Onze Banc.
A doctor by profession and delegate of Terrassa’s Chamber of Commerce in Sant Cugat, Rubí and Catellbisbal, Sun Rius joins the 11Onze project as one of the investors and partners of the new Catalan bank. As co-owner of the health and food shop Gerd Rius Dietètica located in Sant Cugat, she criticises the treatment that traditional banking has given to small Catalan entrepreneurs. That is why she firmly believes in the possibility of breaking free from the old banking structures dominated by the Spanish state and thus achieving the emancipation of the country.
In what ways do you think banking has failed Catalan citizens and entrepreneurs?
It has failed on all fronts. All the current banks have been subordinated to the Ibex-35, they have allowed themselves to be dominated by the entities that make it up and that, in turn, exercise their power over our Catalan entities. This, in my view, is letting down the people who have put their trust in their respective banks.
Do you think that right now, in the midst of the pandemic, is a good time to launch a new Catalan bank?
I think it is more important than ever to build up our network of shops and businesses, especially now that the country has been hit hard by the crisis resulting from the pandemic. It is our tool for the future and therefore we need to strengthen it. But to do so, we need investment and we need to apply once again what we do best in Catalonia: work hard and plan for the future.
What motivated you to invest in 11Onze and what do you expect from the bank?
The project proposed by 11Onze seems very interesting to me. 11Onze is a way of collaborating with our country to achieve a certain degree of independence from Spain. I believe that a Catalan bank isolated from Spanish domination will give us the opportunity to work for Catalonia, and create more state structures in order to have more independence. Therefore, I hope for a bank that helps people and supports the efforts of small entrepreneurs geared towards a real country where we all live in a freer way.
As for other entrepreneurs, how do you think they will view the 11Onze project from the outside?
I think they will value very positively the ease of obtaining investment for their company. They will also appreciate the fact that 11Onze does not depend on Spain because this means that it will only look out for the future of Catalonia. Moreover, it will be a digitalised bank adapted to today’s needs, which are basically to have easy access, streamline processes, and make use of an intuitive application that everyone can use. All this makes the bank a very good proposition.
Given your experience as a businesswoman, what are the key values of 11Onze for you?
From my point of view, it is fundamental that it is an ethical bank. This means that it does not invest in weapons of war or favour the exploitation of children or vulnerable women as we find in other entities. It is essential to attain a banking system for which its main values are people and businesses, and with this, move the country forward.
Indeed, one of the peculiarities of 11Onze is that it is a community bank. Do you think that Catalans want to be part of a banking structure like this?
I think so. Until now, Catalans have had their hands tied when it came to being able to project all their energy into Catalonia and their entrepreneurship. I think that this has meant that, on the one hand, new business fabric has not emerged and, on the other hand, it has not allowed us to get as much rentability as a country as we could have. This is a good opportunity to start from scratch.
With all this in mind, would you invite others to join the 11Onze community?
Yes, of course I would. I think it is an innovative project that looks to the future. Moreover, the people behind this new bank are professionals who are convinced about their preferences and who will give enough confidence to Catalans to start giving off this ambition and desire to work on the future of the country.
What strengths would you highlight about Sun Rius as a businesswoman?
Starting from the fact that I am a doctor, Gerd Rius Dietètica had to bring health but also seriousness. When I opened the shop together with my sister, it was clear to us that my contribution would be to advise customers correctly. In spite of this, if I have to highlight any particular strength, it would be enthusiasm. Enthusiasm for work, to give service to all the people who came through the door and to generate trust thanks to a job well done. Perseverance has also been key for us; never giving up and constantly looking for new challenges that prioritise the satisfaction of my clients. I think this has been the key to the shop.
You are a well-known person in Sant Cugat del Vallès and have a very close relationship with the people of Sant Cugat del Vallès. What is the prevailing mood in the neighbourhood regarding the pandemic?
The word that best defines them is “anguish”. They are worried because they don’t know when or how it will end. They see that the labour market is falling, that there are many people who are becoming unemployed and those who have jobs don’t know under what conditions they will continue. In general, we don’t really know much about the future that awaits us, which is why a project like 11Onze can give us a lot of hope right now because of the solutions it offers. Being able to talk face to face, that you don’t encounter so many barriers when it comes to setting up your personal project and that they are committed to the talent of the Catalans, trusting in their chances of success.
