In our recent FMN webinar we were joined by Michiel Breeschoten of Hooplot Associates and Teresa Garcia, Marketing Manager at Capital Group, who gave us an overview of the Spanish investment market, and what tactics marketers should think about when operating in that market.
Michiel started by giving us a top down view of the Spanish market, including regulation, market characteristics, investment appetite and challenges. Spain is regulated by three regulators, the CNMV, Inverco and Banco de España. All non-Spanish UCITS and AIFs to be marketed in Spain are regulated by CNMV and their handbook is the relevant source for information for those entering the market. Inverco covers the Spanish Pension Fund market and most major asset managers are on their radar. Banco de España provides strict guidance on product reviews, target market, costs and levels of advice in the wake of MIFID II.
The Spanish funds market has grown in size since 2013, much of the growth Michiel explained, fuelled by the cap on investment deposits implemented by Spanish banks, therefore creating a shift from deposits to investment funds. In addition, confidence returned to the market post the credit crisis and there are no capital gains taxes on funds, which is a positive for the investment market. That said, the market is still relatively small at €399bln, compared with Germany at €2282bln.
The top foreign providers in Spain are Blackrock, Amundi, Deutsche and JP Morgan, with Blackrock gaining traction in their iShares ETF business. The total ETF business in Spain is around €30bln and growing. That said, Spanish investors are cautious in general, and favoured asset classes are bond and multi asset funds in the UCITS space and guaranteed / protected funds in the AIF space.
Fund distribution is dominated by the large banks, such as BBVA, Caixa and Santander. Allfunds is an important platform, as the banks use this rather than liaising directly with providers.
The main challenges in the Spanish market are the relatively small size of the market, MIFID II, which requires clean share classes. As ever, it is also important to have local presence and local language material in Spain. One opportunity Michiel identified for international players is to have funds included in discretionary managed portfolios which banks are increasingly providing for their clients. He feels fund groups should not overlook this as a space to grow their assets in Spain.
Teresa went on to cover the issues and opportunities for marketing in Spain. Similar to Michiel, Teresa reiterated that Spain is a crowded, but growing market, that Spanish investors are more conservative than other markets, and that mutual funds continue to enjoy growth as a result of the low interest rate environment.
Spain is a relationship driven market where companies can be successful if they increase their footprint locally, as well as improve their client engagement. Being a conservative market, companies should leverage attributes that resonate locally to increase their footprint, i.e. bringing forth their company heritage and credentials. Local presence with a local team and an active and consistent voice in the market is essential to foster relationships.
To achieve this consistent voice, Teresa points to a constant drip feed of through the line marketing activities, which are tactically combined to increase effectiveness. The four pillars of this activity are Conference, events and partnerships; Communications; Advertising and PR. Third party events can work well for those that are new to the market, but for more established players, their own events can work well if they can bring some new or interesting insights that add value for the clients. Partnerships with tailored proposals which benefit the clients in meeting their challenges, as well as giving the asset manager the visibility and enabling them to build their network can work well.
Teresa specified the benefit of product agnostic content as being a good tool to create that ongoing conversation and build relationships with clients. Especially if content can be delivered in a new or unconventional way to create standout and make it more engaging. PR is also important to continue the engagement with clients as it can position managers as an opinion leader through an independent third party, and keep them front of mind with clients.
Both speakers certainly provided some interesting insights into the Spanish market, and some food for thought for those that wish to, or already do, market funds there.
For those with an interest in international marketing this webcast is well worth a listen.