The COVID-19 investment fund launched by MAPFRE AM two months ago has been used as an example of social innovation in the financial arena. This occurred at the round table on social and sustainable bonds organized by CFA Society Spain.
Present at the meeting was David Iturralde, Head of Fixed Income at MAPFRE AM, together with other professionals from some of Spain’s top financial institutions.
Iturralde explained that the Compromiso Sanitario “has been a pioneering fund because it seeks to address a social issue of the utmost importance—the fight against COVID—while also serving an example of public-private collaboration, which could become a benchmark for addressing social issues in the future.”
The fund’s underlying asset is a social bond issued by the Community of Madrid and offers a guaranteed return of 3 percent, which the client will receive upon maturity in three years, i.e. in 2023.
This return is a much higher than that of the bond (0.36 percent per year), thanks to an additional contribution of almost one million euros by the management company itself. Furthermore, the fund shall not entail any kind of commission, for management, custody or market placement.
Iturralde pointed out that the initiative has received an exceptional welcome from clients, “especially given the difficult conditions for marketing a product,” which has seen the 50 million provided for captured in less than three weeks. The contribution by each investor was capped at 50,000 euros in order to allow a greater number of participants—mainly private clients—and thus enable the bond to serve to bridge the gap between people’s savings and the currently much-needed health funding.
Another distinguishing feature is that the Community of Madrid will allocate 100 percent of the funds captured to the aforementioned health crisis and will provide the management company with an impact report showing the details of the investments it makes in medical aid.
Social and sustainable investment still has some obstacles to overcome, such as improving measurement and the standardization of criteria. According to Iturralde, “The transparency we give to our investors is fundamental. The reliability of the data that we are going to provide and the integrity of the companies involved. Some data is hard to measure and the regulations in place should aim to this data easy to obtain, measure, and understand.”
One thing that is certain is that ESG (environmental, social and governance) investment is going to become increasingly important — investors are keen to do their bit to in terms of social and environmental issues, and they want to see the impact of their investment.
“We already do this at MAPFRE,” explains Iturralde. “We provide information on the CO2 emission of our investments in the Fondo Capital Responsible (“Responsible Capital”) fund. Or hiring employees with disabilities in the Responsible Inclusion Fund. We are looking for financial and social profitability. It’s not just about profitability in euros, but the type of projects we are involved in. Investors are demanding this more and more. It is an unstoppable process.”
CFA Society Spain is a Spanish non-profit institution that promotes the continuous training of investment analysis and management professionals, and the defense of investors’ interests in financial markets.