There is much more passive management than what is said in pension plans. This statement, until recently even embarrassing since it assumed that those responsible instead of actively managing portfolios were limited to seeing how an index behaved, begins to normalize.
And by standardizing, we mean above all that many retirement savings strategies of many entities actively choose index funds or ETFs to provide diversification to their portfolios. There are those that are only partially or completely.
Automated management reaches vehicles
of the company
For example, Evo Banco, which launched at the end of 2020, together with the automated manager Finizens and the pension manager of the insurer Caser, three individual pension plans that use indexed investment vehicles, mainly ETFs and funds of leading management companies of this type. of strategies like BlackRock, Vanguard or Amundi.
Also in employment plans, those promoted by companies, the possibilities offered by passive management are used today. For example, Cristina Gómez, investment analyst at Ibercaja Pensión, points out that they use it in the collective plans of the house “in a tactical but not structural way, as a complement to active management. The main objective is to take advantage of its liquidity and low costs to be able to enter and exit the market quickly, in this way we can rebalance the portfolio in times of volatility or make bets by overweight or underweight a certain asset at a specific time ”, indicates this expert.
In Ibercaja they use this type of funds in times of volatility
Within the portfolios of the Ibercaja pension manager “we use both ETFs and derivatives, when they are sufficiently liquid. In addition, in small products, they allow us to achieve greater diversification ”, she adds.
“Indexed management is used in employment plans practically since it exists,” say sources from Indexa Capital. This automated manager has wanted to curl the loop and offer group pension plans that only invest in indexed ETFs.
The product, launched in November last year under the name Indexa Employment, adds personalization of the investment based on the age of each participant – it follows a life cycle structure to modulate risk based on the proximity of retirement -, global diversification and low commissions, the latter one of the advantages always exhibited by passive management vehicles.
The weight of these strategies in VidaCaixa’s portfolios is only marginal
“This is the first employment plan with a life cycle and contractable online in Spain”, summarized in Indexa Capital, which has designed the product in collaboration with Caser, and which is aimed at any company, with no minimum number of employees. At the moment, 17 companies have joined.
But not all large management companies are in favor of including this type of management. Within the large employment plans managed by VidaCaixa, for example, indexed or passive management instruments have “a marginal weight in portfolios,” they explain. The reason is that its investment style is based on four pillars, with active management being the first, accompanied by diversification, open architecture and sustainability, according to sources from the entity.
While it is true that the open architecture model is used to acquire exposure to the main assets of the chosen investment strategy, “the objective is to achieve a long-term return superior to the benchmarks through the selection of the best money”.
To this is added, according to VidaCaixa, that its employment pension funds “have chosen to diversify the portfolio in alternative assets (venture capital, real estate, infrastructure, private debt), where passive management does not reach and the selection of the best managers it is key to achieving a performance superior to that offered by listed markets ”. Therefore, they conclude that investment in passive management instruments is not relevant in employment plans.
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