At the end of 2017, MAPFRE AM purchased 25 percent of the capital of La Financière Responsable (LFR), a French investment management firm that has specialized in ESG (environmental, social and governance) criteria since 2008. MAPFRE’s founding statutes back in 1964 included CSR, which later evolved into the modern-day concepts of sustainability and Socially Responsible Investment (SRI). However, the purchase of LFR allowed MAPFRE to make use of a dedicated strategy and to begin applying ESG criteria to the new products that LSF released from that point on, as well as to the rest of the range of funds and to the group’s balance sheet.
During a round table held by Rankia on French investment management firms that operate in Spain, Eduardo Ripollés, Institutional Sales Director at MAPFRE AM, presented one of the funds launched in connection with the alliance with LFR: MAPFRE AM’s Capital Responsable fund. “We approached LFR because we wanted to move into SRI (Socially Responsible Investment) in a different way. We didn’t want to rely solely on external sources, and they [LFR] have their own methodology,” stated Ripollés.
MAPFRE AM Capital Responsable is a mixed fund, with 75 percent of the portfolio made up of global fixed income assets (including corporate and government) and the remaining 25 percent made up of European equities. The MAPFRE team manages the fixed income portion, given its experience in managing conservative balance sheets and its strength in this segment. Conversely, the LFR team manages the equities. This fund focuses on environmental criteria — the ‘E’ in ESG. However, at the end of 2019, the two companies also jointly launched the MAPFRE AM Inclusión Responsable fund, a social fund with a format that has not been seen before in Europe — it prioritizes companies striving to include people with disabilities in the workplace.
Ripollés explained that the methodology for the final selection of the securities that will make up the portfolio is based on a questionnaire featuring 140 variables and a framework based on 650 securities listed on European markets. “This questionnaire, which includes public and private information, is sent to investor relations directors, financial directors and (in the case of the Inclusión Responsable fund) HR managers. Based on the answers, we then apply a filter. That is to say, we narrow down the initial candidates into a shortlist, before beginning the macro and financial analysis. Through the whole process, we share our views with LFR through our joint investment committee,” added Ripollés.
However, MAPFRE AM does not shy away from external sources. We employ both Morningstar and MSCI to “validate what we do internally, as if it were a kind of audit,” explained Ripollés.
The director concluded his presentation insisting that “SRI is tremendously profitable.” To illustrate this, within a year, the fund—which also comprises a pension plan format—has already turned positive and is up 5 points against its benchmark.