“The world is a book, and those who don’t travel only read one page of it.” For a number of years, MAPFRE Asset Management, the asset manager of the MAPFRE Group, has been reading page after page — just as Saint Augustine recommended. Since acquiring shares in boutique French company La Financière Responsible (LFR) at the end of 2017, the pages of MAPFRE AM’s travel book have continued to grow. The French partner has brought its wealth of experience in Socially Responsible Investment (SRI) to the partnership. They currently co-manage several ESG-themed funds which make their investments based on environmental, social and governance criteria. What’s more, they also apply their own methodology, which is rare in the world of asset management. This has been recognized by the French Ministry of Finance, which has awarded them the French SRI Label (Label ISR), one of the most renowned certificates at the European level.
In addition to its entry into France, MAPFRE AM, which has more than 100 professionals and a presence in 25 countries, has been growing its Luxembourg-based SICAV, enabling it to reach European investors. Currently, the company, which was launched in 2017, holds more than 1.2 billion euros in equity and has a catalog of six funds, most of them classed as SRIs under article 8 of the new SFDR regulation. Highlighted among these, for example, is the MAPFRE AM Inclusion Responsable fund, whose portfolio incorporates companies that commit to including people with disabilities in the workforce, and which was included as an example of best practices in the report of the United Nations Global Compact. This is, in fact, a genuine fund in Europe, placing an emphasis on the ‘S’ in ESG, or in other words on social characteristics.
“We are not afraid to give an overweight rating to an industry if we are really convinced about it, or conversely to have zero exposure to an industry even if it is a sizable part of the index”
In addition to its presence in Luxembourg, MAPFRE AM recently took the opportunity to register part of its range of funds in the UK. In particular, it will be focusing on major institutional investors in the British market, to whom it has proposed the MAPFRE AM Capital Responsable fund, which now exceeds 100 million euros in equity, along with the MAPFRE AM Inclusion Responsable fund, the MAPFRE AM Good Governance fund and the newly created MAPFRE AM US Forgotten Value fund.
The latter fund was born out of the agreement reached with Boyar Value Group at the end of 2019. The Fund has brought returns of around 20 percent so far this year. Jonathan Boyar, President of Boyar Research, the Group’s analysis division, and the fund’s investment advisor, explained that this product differs greatly from most others in the market. “First of all, we are not limited by market capitalization. We invest where we see the best opportunities. The fund has holdings in companies with a market capitalization of several billion dollars, and also in companies as large as Berkshire Hathaway and Coca-Cola.” “We don’t manage the fund to reflect S&P 500 sector weightings. We are not afraid to give an overweight rating to an industry if we are really convinced about it, or conversely to have zero exposure to an industry even if it is a sizable part of the index. We go where there is value and it is not our intention to imitate the index,” he added.
In addition, companies are evaluated very differently compared to most managers. “The best way to describe our investment philosophy would be opportunistic. Some of the companies we invest in, such as Uber, Twitter, and Angi, are not statistically cheap based on traditional valuation metrics, but they have features that we think give them more value than the market price attributes to them. In the case of these three companies, we believe that the market has not properly valued the networks they have built (and which would be very difficult for competitors to replicate),” explained Boyar.
MAPFRE AM formed a strategic alliance with the New York-based US firm in October 2019. This has enabled it to improve its analytical capabilities. Boyar AM, which was founded in 1983 by investor Mark Boyar, manages institutional and high-equity client portfolios, through a value-oriented investment strategy based on buying companies that it considers undervalued by the market. Since 1975, Boyar has conducted an independent analysis, which it now distributes to more than 100 institutional clients on a subscription basis. Its annual Forgotten Forty report, which includes Boyar’s top 40 investment ideas, has become a must-read publication for value-oriented investors around the world.
Alternative assets
Marketing traditional funds is not the only way to reach the international investor. For years, MAPFRE has also been securing access to institutional investors in alternative assets, for which it has also reached agreements with the best partners. It began taking this approach in the field of real estate, with funds incorporating iconic buildings in prime locations across the main European capital cities. For example, at the end of November, it acquired a British Land office building in London’s Fitzrovia district, where the headquarters of the major tech giants in the British capital are concentrated. The property was home to BBC radio for more than 60 years. Agreements were reached with Swiss Life and Macquarie for this investment in the real estate sector and in such top-quality assets. Additionally, last year MAPFRE AM launched an infrastructure fund with Macquarie that invests in the Australian manager’s strategies, and also launched its first private equity fund. In both the infrastructure and private equity fields, MAPFRE AM has also worked side-by-side with Abante, a firm in which it currently holds a 20 percent share.
MAPFRE AM, headed by Álvaro Anguita, has more than 30 years of experience in the asset management field. It is one of the largest firms in the industry in Spain, with more than 40 billion euros in assets under management in Europe. One of MAPFRE AM’s main objectives is to manage and maximize the profitability of the group’s balance sheet, which also leads to higher returns for shareholders.
MAPFRE AM employs an efficient process to identify opportunities in the market. The ultimate goal is to build portfolios comprising of securities in which the management team has full confidence. To do this, it follows a value-oriented investment philosophy, which means actively seeking opportunities to maximize long-term profits by investing in companies whose market price is below their real value. In turn, as José Luis Jiménez, Group Chief Investment Officer at MAPFRE explained, “Given the unique structure of the Group, the main investor of the MAPFRE Group is Fundación MAPFRE itself. This means that maximizing its profitability also provides a social benefit, because Fundación MAPFRE carries out valuable work in more than 30 countries worldwide, helping the most disadvantaged.”
FINAL WORD
Profitability and sustainability in our investments
MAPFRE’s commitment to sustainability through environmental, social and governance (ESG) criteria is one of the most important aspects of its investment decisions. All of these factors can generate positive long-term effects for society and allow the Group to position itself as an exemplar for other companies. MAPFRE understands that investing based on these criteria not only creates sustainable medium- and long-term value for clients, but also has a positive impact on the environment and on the people around us. In this regard, Responsible Investment (RI) is based on criteria associated with reducing the impact of climate change, promoting equality and health, and fostering ethics and transparency. ESG and Responsible Investment principles also apply to fixed income, equity and real estate assets. MAPFRE currently has a series of products designated as RI (Responsible Investment) which, in addition to generating profitability, have a positive effect on society.