Celebrity managers shine in Spain and achieve better returns than most stock markets | Funds and plans

The Spanish stock market is back on its feet. After years of lethargy in which nationally listed companies underperformed other stock markets, they have managed to shine in recent years. And riding this positive wave, a handful of star managers have achieved returns exceeding 10% annually since 2021. And in 2024 alone, some of them have already accumulated returns of 17%.

One of the names of this new scene is Jose Ramon Iturriaga, manager…

The Spanish stock market is back on its feet. After years of lethargy in which nationally listed companies underperformed other stock markets, they have managed to shine in recent years. And riding this positive wave, a handful of star managers have achieved returns exceeding 10% annually since 2021. And in 2024 alone, some of them have already accumulated returns of 17%.

One of the names of this new phase is José Ramon Iturriaga, fund manager and partner at Abante Asesores. Its investment vehicle, called Okavango Delta, grew 26% last year and has returned 20% this year. “Stock picking has worked again,” explains the investor, referring to the strategy of very carefully selecting each stock in a portfolio. “During the long period of zero rates, stock picking became less relevant and we needed what we called growth stocks.” In them, especially in technological ones, the weight of future cash flows in the current assessment is very important. But with sharp rate hikes starting in 2022, discounting future values ​​has become increasingly costly.

In Iturriaga’s case, the sector that damaged his profits and which has now brought him back to the top is banking. For years, investors have argued that Spanish banks’ valuations are ridiculous, that zero rates are being discounted. ad eternaland that the strong reconversion which this industry has undergone and which has increased its efficiency has not been taken into account. For a long time Iturriaga screamed in the desert and at his bottom, between 2017 and 2020 he did not raise his head. But now everything has changed.

The name of the vehicle he drives, “Okavango Delta”, refers to the Okavango River Delta, which floods the dry plains near the Kalahari Desert in Botswana every year. The metaphor explains itself. The ECB’s interest rate hikes two years ago opened the floodgates that unleashed a flood of money onto banks’ balance sheets. When the intervention rate is zero or negative, financial institutions barely make a commercial profit. However, when they are at 3% or 4%, the bank has a big opportunity to make a significant difference between what it charges for lending money and what it pays for deposits and accounts, the so-called intermediary margin, by bankers’ jargon. .

“These have been difficult years, but it was clear to me that sooner or later there would be a rate hike and it would be recognized that the banking sector was extremely undervalued. That’s why I had so many banks in my portfolio,” Iturriaga explains. His commitment to this industry continues. In fact, the top positions in his fund are CaixaBank, Unicaja and Banco Sabadell. “BBVA’s takeover bid for Sabadell makes sense, although it is long overdue. I wouldn’t be surprised if we see another announcement about Unicaja, although it has a more consolidated core of shareholders,” he muses.

Another sector that was very important to Iturriaga was real estate. In fact, among the companies that contributed the most to the fund’s returns in 2024 are listed real estate investment company (Socimi) Lar España and developer Aedas Homes. Seeing good prospects for this industry, Iturriaga convinced his house Abante Asesores to create a fund specializing only in companies of this type. Abante’s real estate sector, which has Spanish as well as some European companies in its portfolio and is also managed by Iturriaga, returned nearly 27% in its first year.

Solana sequence

Another tireless rocker in the asset management space is Lola Solana, a professional who has long managed a stock market fund in Spain. In your case, it’s Santander Small Caps Spain, which returned 28% over the last 12 months. Solana explains that “the good performance is mainly due to the growth that listed small-cap companies had in May, narrowing the gap that had opened up between large and small companies.”

The manager reflects on the importance of the large immigrant population for many sectors of activity, “which has risen to 250,000 in the last three months, compared with an average of 150,000 in previous quarters.” This flow of people increases the demand for housing, banking services… “The behavior of small companies tends to be closely linked to the economic cycle, and the good moment of the Spanish economy is making itself felt.”

In the case of Solana’s fund, the financial sector also plays a leading role with stakes in Banco Sabadell, Bankinter, Renta 4 Banco… “The fall in rates that started last week seems milder than I expected, and that is how it will remain. help banks continue to succeed. The consolidation drums we hear also favor them.” The manager also holds shares in train maker Talgo, which returned 33% last year, boosted by a takeover bid by Hungarian group Magyar Vagon.

Lola Solana’s fund is one of those that has maintained the best returns over the long term. In fact, over 10 years, it has an average annual return of 5.9%, making it the second-best in the category, behind only Portugal’s BPI Global Investment Fund Iberia, which competes in the same category. Spain and Portugal.

Besides the banking sector, real estate and small companies such as Talgo, another key to the good moment that the Spanish stock market is experiencing is the strong push from two titans such as Iberdrola and Inditex. A good example of this is the Fidelity Iberia Fund, which has already returned 16% this year and is up 29.5% over the past 12 months. The company, one of the best performers of the last five years, maintains its position in Iberdrola at 9.55%, almost the maximum allowed by law. The third-largest position in the portfolio is Inditex, which is up 33% over the past year.

When looking at this new golden age for Spanish stock market funds, what stands out are the specialists in value investing – finding grossly undervalued companies. The AzValor team, which includes Alvaro Guzman de Lázaro and Fernando Bernad, managed to ensure that their Iberian equity fund had an average annual return of almost 14% over three years. His former boss at Bestinver, Francisco García Parames, averages 13% a year in his Cobas Iberia fund. For the first time in more than a decade, the Spanish stock market and its best managers can once again be said to reign supreme in Europe.

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