“Our commitment to investments with ESG criteria has acted as a shield against the crisis”

The pandemic is having a significant effect on the economy—our research arm, MAPFRE Economics, currently forecasts a 7.6 percent drop in GDP in the eurozone—and the fund management sector is of course not immune to this. However, among our defining features are a conservative profile, in line with our group’s core business of insurance, and a long-term approach that protects us in moments of extreme volatility such as at present. Our co-investment model, by which our clients invest where we invest, gives us an additional responsibility in this regard.

Moreover, our commitment to investments based on ESG criteria has provided additional protection. In fact, our entire range of sustainable funds and investment plans have performed exceptionally, drastically outperforming their benchmark indices and generating large profits or minimizing losses. This demonstrates the wisdom of a socially responsible investment policy, a strategy that for our part we are progressively applying to every aspect of the group’s balance sheet.

In addition, the current climate of economic fragility is anticipated to be further prolonged, which has once again led central banks to bring out the big guns. As a result, the prospect of an increase in interest rates has been even further delayed, especially in the eurozone. Consequently, against this backdrop it is no longer sufficient to diversify our portfolios geographically. We must also seek alternative investments, and this is what we are currently engaged in — for real-estate assets, private equity and infrastructure.

There is no doubt that the continuation of this crisis will cause us many difficulties in the medium-term, however, I believe it also opens up a range of opportunities that will enable us to engage in active management. That’s because, with time, we will be able to identify which companies manage to succeed in adapting to this new environment and, in turn, which assets will generate real long-term value for us and our clients.

Over the last decade, the US stock market has been firmly established as the heart and brain of the global economy. There are several pillars that support this predominance, but two things in particular stand out:

• The relative dynamism of its economy
• Its technological leadership

Both of these have been even further reinforced over the last decade. In these uncertain times, investors have given top priority to visibility and quality, resulting in overbuying of stocks due to a lack of alternatives. We are now hopefully past the peak of uncertainty, which will allow other markets to recover. It nevertheless remains clear that the better performance of the US stock market is based on fundamentals, a higher growth rate both in terms of profitability and future prospects. This suggests that the US stock market will remain a benchmark.

Spanish macroeconomic forecasts over the medium-term are particularly pessimistic, especially when compared with other developed countries. This situation is eroding confidence in the current prospects for the country’s stock market and is leading most investors to choose to invest in other geographical areas. A structural public deficit of around six percent, the prospect over the next few years of the largest increase in public debt as a percentage of GDP in Europe, and forecasts of an unemployment rate in the region of 18 percent are all clear examples of the difficult climate.

These macroeconomic data, combined with a complex and polarized political environment and a considerable degree of regulatory uncertainty, are clearly discouraging stock market investors.

In addition, the composition of Spanish stock indices, which are highly concentrated in certain sectors, together with the geographical exposure of the companies they comprise, have heavily penalized any hopes of a positive evolution during the course of the year. The Spanish stock exchange has been one of the most heavily punished by the effects of COVID-19. In the context of recovery based on a gradual easing of the pandemic and its effects, an adequate selection of Spanish companies, duly identified through a process of fundamental analysis, could contribute significantly to the creation of a properly diversified portfolio.