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Asset & Wealth Management
in Spain
June 2017
Insights into the Spanish investment
fund industry
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What are the big trends that shape the Spanish Asset and Wealth Management Industry today?
What is the typology of investors? What kind of products are they interested in?
Read our Asset & Wealth Management in Spain report, and:- Access a complete overview of the Spanish Asset and Wealth Management
industry, along with our insights and analysis.- Explore the dynamics and trends of the Spanish Asset Management industry- Assess the most popular products and define your strategy- Understand why Spanish retail investors are becoming more risk tolerant- Evaluate the differences and trends in active and passive management- Examine the components and size of the investment fund market- Understand the impact of robo-advisory and FinTech on the Spanish Asset
Management industry- Outline the different distribution channels in Spain
- Discover the distribution channels that offer you the best opportunities in Spanish market
- Learn about the industry’s largest managers and investors
Find out why Spain is becoming more interesting to foreign asset managers!
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Executive summary
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Though relatively small compared to other European countries, the Spanish Asset Management industry is experiencing strong growth
As the Spanish asset management industry has enjoyed spectacular growth in recent years, total assets under management (AuM) went from record to record. As of September 2016, total AuM of Spanish domiciled investment vehicles stood at EUR 262 bn. While at the end of 2016, the total AuM of international fund houses reached EUR 115 bn.
Although the Spanish asset management industry is relatively small, total AuM (accounting for domestic and foreign collective investment schemes (CIS)) rose by 70% from 2010 to 2015. This rapid increase can be directly related to the January 2013 decision made by the Bank of Spain, to introduce an interest rate cap on bank deposits. This brought rates in line with other EU markets and triggered an investment fund revival as massive amounts of money were shifted from bank deposits to investment funds.
Subsequently, the cap on interest rates increased domestic fund launches and represents also a change to lower risk aversion by Spanish fund investors as they are searching for ways to maximise their returns. So far, this additional fund launches by Spanish banks have garnered massive amounts of investor monies.
More and more foreign asset managers are entering the Spanish fund market
The Spanish domestic asset management market is predominately dominated by large banks. Among the domestic players Caixabank, BBVA and Santander, and their asset management subsidiaries, are the undisputed leaders.
Among international fund houses, BlackRock, including iShares, is the largest foreign fund house as it has the most Spanish assets. Spanish iShares AuM has more than doubled in the last two years and BlackRock’s active book has also grown to the number one active manager position. JP Morgan Asset Management, active funds are ranked second.
The increased demand of Spanish investors also translated into an increase in foreign assets. Since 2013, overall foreign fund assets in Spain have grown rapidly, although the growth rate slowed in the first nine months of 2016. This slowdown in net sales was witnessed all over Europe as a result of high volatility in the equity market.
Consequently, the number of new foreign fund houses entering Spain has also lost pace. However, new entries still occur in good numbers. The trend of foreign fund managers entering the Spanish market in the coming years will continue. A clear indication of this is that Asian asset managers have started entering the Spanish fund market. China Asset Management has registered its Luxembourg-domiciled SICAV with the CNMV, and Japanese firm Tokio Marine Asset Management have started selling its USD 82mn (EUR 74mn) Irish-domiciled fund to investors in Spain.
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Currently, banks dominate the fund distribution industry in Spain and are the main drivers of success or failure for international fund providers aiming for Spanish clients. Without assessing the importance of the leading banks in Spain, it is rather difficult to understand large parts of the fund distribution landscape in Spain.
Private banking is recovering from the crisis years in Spain. The sector has seen an increase in corporate activity since then with several domestic and international players announcing they plan to increase their private banking activities in Spain, with increased focus on ultra high net worth individuals.
Fund platforms are widely used in Spain. This includes by professional fund buyers from banks or fund of funds. Accordingly, having funds accessible on the most important platforms in Spain is crucial for success. By far, the largest fund platform with an market share larger than 70% is Allfunds Bank. Headquartered in Madrid, with more than EUR 220 bn assets under administration and around 46,000 funds from approx. 500 fund houses listed, it is Europe’s largest mutual fund platform. Spain's Santander and Italy's Intesa Sanpaolo, agreed in March 2017 to sell a joint 75 percent stake of the mutual fund platform for around EUR 1.4 bn to the sovereign wealth fund GIC and the private equity fund Hellman & Friedman.
As platforms are simply about putting products on a shelf, there is no guaranteed business. Some platform providers such as Allfunds Bank and Banco Inversis therefore provide dedicated research teams, who provide recommendations to specific B2B clientele.
FinTech and robo-advisory are the current buzzwords in wealth management operations, including in Spain. Despite the FinTech and robo-advisory market still being very small in business volumes, the sector appears attractive with new ventures being launched and established players like banks and asset management firms expected to buy into it and to develop in-house.
Spain has a young, but growing, independent financial advisory sector under the EAFI (empresas de asesoramiento financiero) regime introduced by the CNMV in 2008. The sector currently controls combined assets of EUR 25 bn, predominantly in investment funds.
The investment consultant landscape in Spain is fairly underdeveloped and the importance of the sector is not comparable to the UK or Nordic countries, for example.
The pension market in Spain is not well developed with AuM of about EUR 154.4 bn in 2015. Future prospects show low signs of improvement, as new reforms by the government weaken instead of strengthen the pension system. The Spanish pension fund manager leaderboard is mainly dominated by domestic banks, with Fondo de Reserva de la Seguridad Social, the state managed pension fund, being the largest fund, followed by Caixabank in second place.
Spanish insurance companies have, so far, mainly followed an in-house investment strategy. Assets under management amounted at the end of 2015 to EUR 279 bn of which approximately 70% were invested into fixed income products. At the same time, allocation of assets into collective investment schemes amounted to only 6.7%.
Funds of funds (FoFs) in Spain posted the highest growth percentage among their European peers in 2015. Assets almost doubled to EUR 42.0 bn. More than 400 FoFs are domiciled in Spain according to Morningstar data, with Caixabank being the largest FoF manager, followed by Santander, BBVA, Bankia and Allianz Popular. Furthermore, there are a large amount of smaller FoFs, with assets below EUR 300mn, in the Spanish market.
FinTech and robo-advisory are expected to revolutionise the fund distribution industry
Due to private households being the predominant investors, institutional investors have, so far, had a diminished role in Spain
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Overview of the Spanish asset management marketThe Spanish asset management industry is relatively small compared to other European countries. Only 2.3% of European UCITS assets are domiciled in Spain (EUR 182.1bn). For cross-border distribution purposes, international asset managers are using fund distribution hubs like Luxembourg, France and Ireland to domicile their UCITS. The same relates to the AIF market. Only, 1.3% of European AIFs’ assets are domiciled in Spain (EUR 68.9bn as at September 2016).
Despite the small market share of the Spanish asset management industry, assets kept on rising over the past few years. This can be directly attributed to reduced interest rates which encourages investors to look for more profitable investment opportunities. The cap on bank deposit interest rates was introduced by the Bank of Spain in January 2013 in order to revive the low investment appetite that remained after the financial crisis.
The rise of assets from 2014 to 2015 had its origin mainly in positive net sales of EUR 24bn. With an inflow of EUR 33bn for Spanish domiciled UCITS funds, 2015 was clearly an outstanding year. The AIF market proved in 2015, with outflows of EUR – 9bn, to be less successful, however, the market recovered and exhibited net inflows of EUR 6.9bn until September 2016 making the lion share of net inflows for the year.
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0
20
40
2012 2013 2014 2015 Sep 2016
-10
2334
24
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Net assets of UCITS and AIFs domiciled in Spain (EUR bn)
Net sales of UCITS and AIFs domiciled in Spain (EUR bn)
Source: EFAMA
0
50
100
150
200
250
300
2012 2013 2014 2015 2016
150
185
229254
269
0
50
100
150
200
250
300
2012 2013 2014 2015 2016
150
185
229254
269
UCITSAIFs
73%27%
9
46%
25%
29%
Yes, a lot
Yes, but not broadly yet
No, not really
Distribution trends Senior fund selector sentimentMost Spanish fund selectors interviewed in January 2017 stated that they do not really use digital channels like websites and apps for information gathering and communication with fund houses. However, generally there appears to be a steady increase in use of such channels in recent years across Europe.
Information gathering & communication with fund houses: Do you use digital channels (websites, apps, etc)?
Source : accelerando associates - Spanish Fund Selector & Senior Sales Surveys
Moreover, professional Spanish fund buyers are also stating that, while generally pretty good, Spanish fund houses need to improve their digital accessibility and transparency.
The fact that most senior sales people interviewed expect most competition to come from passive funds and ETFs, rather than existing peer groups or in house funds increases the importance of top-notch client service models.
Our exclusive survey assesses the sentiment of Senior Sales people and Fund Selectors of the Spanish Asset Management market. Explore their opinions and insights about:
- Expected fund sales in Spain for the coming twelve months- Their challenges in client service- How fund houses use digital channels- The future competitor composition- The most attractive asset class for the coming twelve months
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Overview of Spanish institutional investors
Pension funds
Insurance companies
Fund of funds
1 2 3Pension funds
The pension market in Spain is not well developed with AuM of about EUR 154.4bn in 2015. Future prospects show low signs of improvement, as new reforms by the government weaken instead of strengthen the pension system.
Insurance companies
The insurance sector itself is strong in Spain. However, insurance groups as fund distribution players are limited.
Fund of funds
Funds of Funds in Spain have posted the highest percentage growth among their European peers in 2015.
A large proportion of the Spanish FoF market actively invests in external funds.
Sources: PwC Market Research Centre
How are pension funds, insurance companies and other institutional investors shaping the Spanish Investment Fund industry?
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Foreword 4
Executive summary 6
Introduction: macroeconomic overview and asset management market 10
Macroeconomic overview Figure 1: Key economic indicators, page 11 Figure 2: Year-on-year evolution of the macroeconomic variables of interest up to Q3 2016, page 12
Asset management market Figure 3: Development of assets distributed in Spain (EUR bn), page 13 Figure4:Keyassetmanagementfigures,page13
1 The Spanish asset management market landscape 16
Overview of the European asset management market Figure 5: Net assets of UCITS and AIFs in Europe (EUR bn), page 17 Figure 6: Net sales of UCITS and AIFs in Europe (EUR bn), page 17
Overview of the Spanish asset management market Figure 7: Net assets of UCITS and AIFs domiciled in Spain (EUR bn), page 18 Figure 8: Net sales of UCITS and AIFs domiciled in Spain (EUR bn), page 18
Size of the Spanish asset management market Figure 9: Evolution of collective investment schemes, page 19
Asset class breakdown and net flows Figure 10: Asset class breakdown of funds (December 2016), page 20 Figure 11: Amount of AuM born by institutional investors page 20
Retail investors Figure 12: Percentage of savings invested into domestic and foreign CIS, page 21
Overview of foreign assets available in Spain Figure 13: Country breakdown by domiciliation of cross-border UCITS funds distributed in Spain, page 22 Figure 14: Evolution of the number and AuM of cross border UCITS funds distributed in Spain, page 22
Popular foreign asset classes Figure 15: Top 10 foreign funds by asset allocation in Spain (market share by AuM), page 23 Figure 16: Top 30 foreign funds by asset allocation in Spain (market share by AuM), page 23
Top 30 foreign asset funds Figure 17: Top 30 foreign funds by AuM in Spain, page 24
Our report includes
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Asset class snapshots: ETFs Figure 18: Asset allocation of domestic and foreign ETFs listed in Spain (December 2016), page 25 Figure 19: Evolution of AuM of Spanish ETFs, page 25 Figure 20: Top 10 Spanish ETFs by trading volume (December 2016), page 26
Asset class snapshots: Real estate Figure 21: Evolution of assets of real estate funds (EUR bn), page 27 Figure 22: Top 3 promoters of open-ended retail and institutional real estate funds, page 27
2 Distribution trends 26
Main players Figure 23: Top 10 promoters by distributed AuM (December 2016), page 29 Figure 24: Top 10 promoters by net sales (December 2016), page 29 Figure 25: Top 10 promoters of foreign funds by AuM (September 2016), page 30 Figure 26: Top 10 promoters of foreign funds by YTD net sales (September 2016), page 30
Overview of investors Figure 27: What are your expectations for fund sales in Spain for the next 12 months? page 31 Figure 28: In which investor segment do you expect most percentage growth in fund sales in Spain (12 months)? page 31
Client service model requirements Figure 29: What provides the major challenge in Spanish client service nowadays? page 32
Distribution trends Figure 30: Information gathering & communication with fund houses: Do you use digital channels (web, apps, etc)? page 33 Figure 31: Wholesale space: Do you witness a trend from open towards guided architecture in Spain? page 34 Figure 32: Where do you expect major competition from? page 34
Distribution channels Figure 33: Fund sales in Spain have been stellar in recent years. Looking into 2017 & beyond, do you think that:, page 35 Figure 34: In which asset classes do you expect most sales for the next 12 months? page 35 Figure 35: For which asset class do you have the highest expectations going forward (12 months)? page 36 Figure 36: For which asset classes have you increased your selection/analysis capacities (last 12 months)? page 36
3 Distribution channels 38
Distribution channels – Banks Figure 37: Top banks in Spain by market capitalisation (EUR bn), page 39
Distribution channels – Private banks Figure 38: Top 10 private banks in Spain (EUR m), page 40
Distribution channels – Fund platforms
Distribution channels – Fund platforms: FinTech & robo-advisers
Distribution channels – EAFIs & Sociedades de Valores: independant wealth managers Figure 39: Net new EAFI annual registrations in Spain, page 43 Figure40:EAFImainfigures(EURbn,2015)page43
Distribution channels – Family offices Figure 41: Top 10 richest Spanish individuals & families (USD bn, March 2016), page 44
Distribution channels – Investment consultants
Distribution opportunities & challenges Figure 42: Distribution opportunities & challenges, page 46
4 Institutional investors 48
Overview of Spanish institutional investors Figure 43: Overview of Spanish institutional investors, page 49
Pension funds Figure 44: Three-pillar system, page 50 Figure 45: Evolution of total assets of pension funds by asset class (EUR bn), page 53 Figure 46: Evolution of foreign investments by asset class (EUR bn), page 53 Figure 47: Largest pension funds in Spain page 53
Insurance companies Figure 48: Evolution of total assets held in insurance portfolios (EUR bn), page 54 Figure 49: Evolution of life and non-life premiums (EUR bn), page 54 Figure 50: Top 10 insurance undertakings (by premium in EUR bn, 2014), page 55 Figure 51: Asset allocation in insurance portfolios (December 2015), page 55
Fund of funds Figure 52: Asset allocation of Spanish domiciled fund of funds, page 56 Figure 53: Evolution of assets of Spanish domiciled fund of funds (EUR bn), page 56 Figure 54: Top 25 Spanish fund of funds promoters in Spain
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5 Brand, conferences & media 58
Ratings & rankings
Brand
Conferences
Conferences & social media Figure55:Doesyourfirmfollowanactivesocialmediastrategy for marketing in Spain? page 62
Media
Appendix: Spanish fund buyers methodology 64
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Who we are
Philip Kalus Founder & Managing Partner, accelerando associates
Dariush Yazdani Partner and Leader, PwC Market Research Centre
Patrick John AtkinsPartner, PwC Spain Asset Management
Dear Reader,
accelerando associates has published annual reports on fund distribution in Spain for a number of years now.
In September 2016, we joined forces with PwC’s Market Research Centre in Luxembourg in order to set new standards in terms of asset management and fund distribution country reports. Our joint forces will ensure thorough, complete and highly practice-relevant intelligence for asset managers worldwide.
In recent years foreign fund houses have seen Spain as one of the “it” markets for entry. Market net inflows have shattered records and the fund of funds, which is the most open segment, posted the highest growth percentage in Europe in 2015.
Large amounts of foreign funds have entered Spain and respective headcount has grown substantially. However, will Spain be able to maintain the levels we have witnessed? What’s next in fund distribution in Spain?
I trust that you’ll find valuable insights in this report and you’ll enjoy the read.
All the best
Dear Reader,
The PwC Market Research Centre is proud to release, together with accelerando associates, its third Asset & Wealth Management country report.
Our country reports are a must have for Asset & Wealth managers considering opportunities in a particular country or trying to understand the latest asset management trends, investor appetite for various asset classes, ease of market entry, level of competition and distribution channels.
At the moment, the Spanish market is focused on selling to retail investors, who constitute the majority in the market. We believe that the AuM will continue to grow as foreign fund houses keep entering the market, and Spanish households develop more of an appetite for risk.
With this in mind, if institutional investors become more engaged in channeling their assets into the investment vehicle industry, the Spanish Fund landscape could be completely transformed.
With this report, we aim to help guide asset managers in their business development strategies.
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Contacts
Dariush Yazdani Partner, PwC Market Research Centre
+352 49 48 48 21 91
Philip Kalus Founder & managing partner accelerando associates
+34 96 36 82 314
Daniel Pierce Partner accelerando associates
+34 96 15 63 683
Patrick John Atkins Partner, PwC Spain
+34 915 684 266
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