“Fixed income offers opportunities we didn’t have before the interest rate hike”

The historic rise in interest rates — very aggressive because of the speed with which it was implemented — brings with it an interesting opportunity for those who are starting to think about emptying their savings. Fixed income has become one of the alternatives that small (and large) savers are looking for the most. But the market is huge and offers an endless number of products worth considering. «Fixed income offers opportunities that we did not have before the rise in interest rates to be able to build a product with a very attractive return over a period of one or two years. And this is actually where a large part of the money inflows into investment funds has been concentrated in recent months. We have followed this movement and made fixed income funds available to our clients. But thinking long-term and medium-term, and since this is a completely valid alternative for liquidity positions, the reality is that the profitability provided by fixed income alone is not enough to cover inflation,” summarizes Luis Megías, CEO of BBVA Asset Management Europe. This expert assures that those who are looking for a medium and long-term investment horizon and want to invest their money in business must combine the component of fixed income with that of risk.

Megías reminds that anyone can invest and, most interestingly, that any time is a good time to start building a portfolio: “It’s always a good time to put our money to work.” However, in order to do it correctly, what every ordinary citizen must do is to ask himself some basic questions: «The first thing a client must do is to define what his investment goal is, what his horizon is. Because investing for retirement, for which I have 25 or 30 years left, is not the same as investing to buy a house within two or three years. Once that horizon is defined, it determines the level of risk, how much risk we are willing to take. And with these two well-defined variants, what the client has to do is to delegate decision-making to the bank’s experts,” summarizes Megías. With this data on the table, it is up to the subject to make a decision about which funds to invest in, especially when and in what percentage: «By delegating decision-making, clients eliminate personal cognitive biases that we all have as human beings. Because probably, when you have to take risky positions, it is when the market is discounting a very negative situation and has the most penalized prices; while when it is necessary to reduce the risk, it is possible that we find ourselves at a moment when the market has a better situation or, at least, greater satisfaction”, he summarizes.

The results support the management: «We managed to overcome and manage crises. And honestly, we did really well. Especially last year with rising interest rates. We expected that we had fixed income portfolios of very short duration, very protected. Also, to be very honest, we didn’t know inflation would rise above 10%, but we thought it would. And for this reason, we had our fixed income portfolios protected from inflation,” he summarizes.

any customer

One of the most widely held beliefs is that investing is something that is available to the few who have large capital accounts. Nothing is further from reality. The executive director of BBVA Asset Management Europe reminds that the entity has products adapted to all budgets: «We have options for clients with the highest net worth, with portfolios of more than 2 million euros; options for private banking segments, for those who have more than 200,000 euros; We also have Multistrategy portfolios, starting at €20,000. But we also offer the Quality Investment family for those who have less than 600 euros. Everyone can build the future with their savings, regardless of how much capital they have,” he explains.

“The Galician investor is starting to take risky positions and is no longer so conservative”

Despite the economic turmoil, BBVA’s asset management department managed to achieve good results in managing its clients’ money. At the end of 2022, the entity had assets under management in funds of EUR 43,850 million, closing the year with a drop of only 0.4%: “We fared better than the entire system as a whole, which fell by 3.6%,” he summarizes Luis Megías.

They experienced growth this year. Assets under management by the month of May reached EUR 47,448 million, which represents a growth of 8.2% in just five months: «This percentage is once again higher than what we saw in the whole system, i.e. 7.2%, which shows that we continue to gain market share”, sums up the expert.

In Galicia, the numbers are also very positive: «According to data at the end of May 2023, BBVA’s net subscriptions reached 148 million euros in Galicia, which represents 5.31% of the 2.787 million it represents. national group”.

In addition, there is a fact that attracts a lot of attention. Since in Galicia, the percentage of investments in global vehicles (funds that do not invest only in fixed income, but also include other types of risky assets) represents 53.64% of the total investment in the community, compared to 44.15% representing investments in this type vehicles throughout the country. “It has traditionally been said that Galicia is more conservative than the national average, but with these data we are beginning to see that they are no longer so conservative and that they are taking riskier positions,” summarizes Luis Megías.

BBVA Futuro ISR, a fund through which you can also bet on solidarity

At BBVA, they are not only committed to helping their clients build their future with their savings. This money can help many other people as well. And through BBVA Futuro ISR, a socially responsible solidarity investment fund that has annually donated part of what it collects from the management fee for solidarity projects for the past five years.

This investment product, which has more than 22 years of history, currently exceeds 2,000 million euros in assets and has almost 80,000 participants. As the entity explained, the management team selects companies that integrate opportunities to minimize environmental, social and governance risks into their strategy and operations, in order to create value in the medium and long term.

But there is another factor that makes it really interesting. Because, for the fifth year in a row, BBVA Asset Management has once again distributed one million euros to more than 20 projects on different topics that are being implemented in different locations in Spain. In this way, they point out, the full amount of the donation will directly affect 24 provinces of twelve different autonomous communities, since some projects are being developed in several regions at the same time. “The goal of this type of initiative is to reach where other aid does not normally reach. That is why we are dedicated to small non-governmental organizations that can do great things with this money”, summarizes Luis Megías, CEO of BBVA Asset Management.

Almost 170 BBVA volunteers distributed throughout the Spanish territory participated in the selection, evaluation and analysis of candidates in order to select the best projects to combat climate change and inequality through inclusive growth.

the chosen ones

In addition to all these knitting works, the bank distributed three donations of 100,000 euros for three initiatives: the project for addicts, the elderly and the health of the Fundación Cris de Investigación para Vencer el Cáncer; another on social inclusion from the Bali Children’s Foundation; and third for the environment for Fundación Ecología y Desarrollo. In addition, other donations of 35,000 euros each were awarded to various social and environmental projects throughout the territory.