Achieving positive returns in 2022 has been an impossible missionand. With the widespread falls in all equity markets, the historic collapse of public and corporate debt and the correction in all currencies except the dollar, where to find refuge? Even so, a handful of Spanish fund managers have achieved high returns amid the financial storm brought on by runaway inflation. Who are they? How do you see the exercise that now begins? What are they doing with their wallets?
Portfolio management manuals indicate that one of the biggest risks taken when deciding where to put money is the choice of manager. Between choosing a successful fund and a rival that is doing poorly, the differences can be huge. Studies also indicate that there is usually a reversion to the mean and that investors who have had an exceptionally good year are more likely to disappoint the following year. That is why consistency and recurrence in management is so important.
One of the management teams that has shown to be in the best shape in the last five years is that of Azvalor. The firm founded by Álvaro Guzmán de Lázaro and Fernando Bernad (former managers of Bestinver) has become the true benchmark in Spain. Its flagship fund, Azvalor Internacional, has achieved an average annual return of 26% in the last three years with its firm commitment to oil and mining companies.
In their last quarterly letter, the managers already warned that the bullish cycle of this type of company was almost exhausted and that, for the first time in five years, they were going to reduce the weight in the portfolio. For now, Guzmán de Lázaro and Bernad give few more clues as to where their next moves are going to go.
“We focus on studying companies. Trying to predict what the markets are going to do, in general, is counterproductive and expensive”, they explain from Azvalor. In the firm they point out that with the liquidity they are hoarding and the price falls in the markets, their funds “still have a revaluation potential of 100%, thanks to continuing to buy when the shares are very cheap.”
In the latest portfolio positions reported to regulators, Azvalor’s funds are still dominated by companies in the energy and mining sectors.
Another of the funds registered in Spain that has performed spectacularly in 2022 is Hamco Global Value. It is a vehicle of the Andbank manager, but advised by John Tidd, an American manager. In the last three years it has achieved an average annual return of 28.9%. As in the case of Azvalor, the oil industry has contributed the most to the fund’s profitability. And how do you see the market in 2023?
Tidd explains that they continue to view the current stock market situation as “bearish” and that market lows may even be seen within two years. Among the underlying trends that he believes will continue, stands out the transfer of investors from growth companies (such as technology companies) to those with a value profile, that is, whose valuation is based more on current fundamentals and not on prospects for future growth. future growth.
John Tidd explains that they are being very cautious with the recommendations for the fund that they advise “including defensive sectors, liquidity and assets that have good medium-term fundamentals”.
Hamco Global Value continues to be positioned in recurring consumer companies, Asian markets, energy, and also in Argentina, a market closely studied by Tidd and in which “there may be positive news with this year’s elections and the drop in inflation.”
One of the big surprises in the asset management sector, in 2022, was the emergence of the fund Alcalá Multigestión Garp, of the Andorran firm Creand Wealth Management. This vehicle achieved a stratospheric profitability of 95% last year. Whoever invested with them at the beginning of last year has managed to double their position in 12 months.
The fund, with assets under management of only 16 million euros, has an external advisory firm based in Logroño (La Rioja), but Luis Buceta, Creand’s investment director, explains some of the characteristics of the product. “This is a fund with a very specific investment policy, which is not suitable for all clients due to the high level of risk it assumes”, he reasons.
Alcalá Multigestión Garp maintains a fairly strong position in energy companies, oil companies, many industrial companies linked to this sector, and raw materials, especially gold, although not directly, but through mining companies.
Regarding the recommendations for 2023, one of the most significant tactical changes of the fund, according to Buceta, is a commitment to the Ibex 35. “It is an index that is especially punished from a valuation point of view compared to other European indices and, due to its composition, it can be seen to benefit especially during the coming quarters.”
Another fund with positive results in 2022 is the Ibercaja Global Dividend, a vehicle that has managed in the last decade to provide its participants with an average annual return of 5.6%, well above the average for the sector.
Óscar del Diego, investment director of Ibercaja Gestión, explains that the fund “invests with a long-term vision in companies with growing and recurring dividends, for which they analyze cash generation, debt, and the priorities of the management team.” From the firm they always look for actions with a quality bias “to avoid companies that have to cut their shareholder remuneration in the near future.”
In general, the funds that have opted for companies that pay generous dividends have been a good choice in 2022 and could continue to be so this year, since many investors will continue to seek the certainty that these types of companies provide.
In the case of the Ibercaja Dividendo Global fund, in recent months “the weight has been increasing in sectors considered to be growing, such as technology, or manufacturers of non-essential consumer goods,” says Del Diego. Of course, they always take into account that they meet the requirements for cash generation and shareholder remuneration. Specific, have incorporated the semiconductor manufacturer BE Semiconductorsthe car manufacturer Toyota and the United States restaurant chain Darden Restaurants (with brands such as Olive Garden or LongHorn Steakhouse).
If achieving positive returns in 2022 has been difficult, achieving it with fixed income investments has been something reserved for very few. Luis Bononato, manager of the Global Allocation fund (of the Renta 4 manager) has achieved this with a combination of long and short positions and the use of complex financial derivatives. Specifically, the vehicle he manages rented 75% last year and accumulates an average annual return of 32% in the last three years, making it one of the best funds in the world in this period.
Bononato, which has maintained bearish positions on some bonds, considers that one of the most attractive assets to invest in this start of 2023 continues to be inflation-linked bonds. “It is the asset that we like the most in the medium term, and we will probably increase the position a little more. They have started the year cheap”, explains the manager. As for the stock market, Bononato believes that the good start to 2023 in the markets is not sustainable, “no matter how much respite the inflation data may seem to give us.” In his opinion, there will not be a true bull market unless there is a true recession. “This will be in any case a year with many curves.”
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