Spanish investors aspire to an APR of 8.9% in the next five years even with rates at 0%

To achieve this ambitious challenge, there are tools such as discretionary portfolios or venture capital, which are gaining ground.

A mobile investment platform.

As much as the ECB has reduced its stimulus arsenal for fear of inflation, official interest rates remain at 0% in Europe. And yet, this does not seem to placate the high profitability expectations that Spanish investors have in terms of their portfolios. His aspiration is to achieve a APR of 8.9% for the next five years, According to a recent survey of Schroeders. But, even worse is the estimate of global investors, who expect 11.3%.

Two conclusions can be drawn from this barometer of the British manager. In the first place, how far away investors’ expectations are from financial reality and, secondly, that in Spain there is a climate of greater pessimism -or realism, depending on how you look at it- compared to the rest of the world.

Because, within this inflated context, the forecast of Spaniards in terms of their performance in the medium term has dropped 1.1 percentage points since the 2020 survey, from the level of 10%, while in global investors it has risen 0.4 points, from 10.9%.

Despite the challenges brought about by the pandemic, global investor confidence has soared to its highest level since the Schroders ‘Global Investment Study’ began in 2016. More than 23,000 investors from 32 locations around the world have participated in this year’s barometer. In Spain, however, confidence is only above the 2017 level.

Moreover, Spaniards are now among the investors with the lowest investment expectations, both globally and in Europe. Globally, only Japanese and Canadian investors expect lower returns (8.5% and 8.6%, respectively), while on the old continent, Spanish investors are only ahead of Germans and Italians (8. 6% and 8.2%, respectively).

tools to invest

With such high expectations, rates at 0% and inflation at levels of 3% in Europe, the million dollar question is… where or how to invest to meet demand? Because the challenge is ambitious and, why not say it, certainly unreal given the historical conservative profile of the Spanish.

A service that is becoming very attractive in Spain are the discretionary portfolio management contracts, that already add up to an estimated patrimony of 100,000 million euros, figure that includes both the managers that provide the data to Inverco (above 96,000 million) and those that do not, which represents a six-monthly increase of 16%.

A jar with euro coins of different denominations.

A jar with euro coins of different denominations.

Within these portfolios, 35.5% are external funds from the best international managers (which invest in bonds, shares or other financial instruments), although a majority of 64.5% continue to be the house’s own funds, normally banks and insurance companies in the country.

On the other hand, according to the report ‘The New State of Advice’, prepared by Accenture, investors increasingly expect their financial advisors to provide them with more comprehensive and personalized wealth offers, with products that encompass from wealth management to insurance and traditional banking productsand also that these products are more aligned with their social values.

The consultancy’s survey, carried out among 1,000 investors who have a financial advisor, reveals that while four out of five investors surveyed (79%) expect their advisor to offer them banking and insurance products, 85% of those members of Generation X, 91% of millennials and 97% of Gen Z, respectively, expect such services, compared to less than half (47%) of Gen Zers. baby boomers.

The idea of ​​360-degree management is reinforced by the fact that 56% consider essential a wealth offer that includes advice, risk protection and loan products.

Technology competition

Keep in mind that six in ten respondents (58%) expect to inherit a significant amount of money or estate from their parents, and more than a quarter (26%) plan to select a new advisor to oversee all their assets at the time of inheritance. And in the financial sector, competition is increasingly fierce, with new entrants from the technology side.

According to the Accenture document, 95% of Generation Z, 83% of millennials and 74% of Generation X would consider the heritage products and services offered by Google, Apple and Facebookcompared to only three in ten baby boomers (30%).

Unlisted assets

Looking back, of those who invested in 2020 with a pandemic in between, 47% of the Spaniards surveyed acknowledged having made more conservative investments, while 44% opted for the riskier ones, based on the Schroders report. The investment areas preferred by Spaniards were technology securities (60%), real estate stocks or funds (48%) and cryptocurrencies (46%).

The interior of a renovated apartment in Madrid.

The interior of a renovated apartment in Madrid.

After coming out of confinement, spending on real estate has been the area to which the most money has been allocated, both by Spanish and global investors. 43% of investors admitted having invested or bought a property.

Unlisted alternative assets are generally on the upswing in the face of ultra-low or negative rates. Last year they marked a new maximum of 2.19 billion euros in Europe, 35% more than the 1.62 billion of the previous year.

Preqin and Amundi recall in their ‘Report on Alternative Assets in Europe 2021’ that private equity activity has started strongly this year, with a value of operations in the first half of 216,000 million euros, which represents 83% of the total of 261,000 million for the whole year 2020. In addition, with 159,000 million of capital raised by managers of private equity (or venture capital) funds based in Europe in the first six months, “2021 is on track to be a year record for raising new funds”.