MAPFRE funds by risk profile
John Maynard Keynes posited in one of his macroeconomic analyses that, in times of economic recession – such as that which some experts are predicting for the coming months – a decision by individuals to increase their level of savings would actually end up resulting in lower disposable income. Extrapolating this theory to 2022, the current inflation, geopolitical crisis and supply crisis of recent months have added a point of pressure on individuals’ finances, which has opened up the possibility of seeking new investment options.
Therefore, according to the economist, the economic situation plays an important role in decision making. And, compared to savings, a range of investment possibilities opens up where, through active management by a professional manager, opportunities can arise. Defined as a set of characteristics that profile an investor according to a series of parameters (including risk tolerance, age, investment time horizon, return objectives, income, financial literacy, etc.), the investment profile helps determine which funds or financial products are most suitable for the ultimate goal of achieving a return.
The different investment profiles are explained below, as well as the funds classified according to Morningstar's risk rating.
Investors with this profile tend to be more risk averse than others, so their exposure is minimal. They also seek to make their savings profitable over a period of more than 18 months. Therefore, the paid-up capital is invested in highly stable products with a conservative approach, such as fixed income. From this position, the investor accepts a lower return in exchange for greater security for his or her money.
The main objective of products associated with this profile is to minimize market price variations in order to keep volatility under control.
The list of MAPFRE funds with a conservative profile include the Fondmapfre Elección Prudente (which recently received a Fundspeople rating), the Fondmapfre Renta Fija Flexible (rated with five stars by Morningstar), the Global Bond Fund and the Fondmapfre Renta Corto.
A moderate investor is usually cautious, like the prudent investor, but, unlike the former, is willing to assume a certain degree of risk in order to increase profitability and, therefore, profits. Here, it is a middle ground where investors with this profile seek a balance between profitability (equity instruments) and safety (fixed income instruments).
With this strategy, the investor assumes that returns may be negative for a period of time and within acceptable limits. As in the previous case, this type of investment is suitable for a long-term period (more than four years) in order to be able to recover any losses.
For moderate profiles, the most prominent MAPFRE funds (and rated with a Morningstar risk level of '4') are the Fondmapfre Moderate Choice (which also received the Fundspeople rating), the Fondmapfre Rentadólar and the Responsible Capital Fund (which seeks the integration of ESG criteria in portfolio companies).
The third investment profile advocates a higher risk than the previous ones. It is willing to assume the necessary risk in exchange for obtaining the highest possible return. In this case, the portfolios of products associated with this profile tend to be composed mostly of assets with a higher percentage in mutual funds that invest in equities, with much less exposure to fixed income than the more conservative ones.
The profile of this type of investor tends to be young people with a high income and a certain economic solvency, and the investment time horizon goes beyond six years. However, experts recommend gaining knowledge of all the consequences beforehand. When one invests a large part of one’s capital in the stock market, the range of profitability (positive/negative) is very high and can result in losses.
For investors with a high risk profile, MAPFRE has several funds with a Morningstar risk rating of '5': from Fondmapfre Global to Fondmapfre Elección Decidida and Fondmapfre Bolsa Mixto.
Investors with the riskiest profile are looking for a return on their savings beyond eight years. When they build their portfolio, asset allocation will focus solely on finding the best opportunities in such equity funds both in Spain and globally.
In this case, portfolios do not have a limit on price variation and, therefore, no volatility control is required.
For this last profile, the most outstanding funds are: the Fondmapfre Bolsa Iberia, the Fondmapfre Bolsa Europa, the Behavioral Fund (based on Behavioral Economics and investing in sports companies and soccer teams), the Good Governance Fund, the Inclusion Responsable (investing in companies committed to the inclusion of people with disabilities) and the US Forgotten Value (a fund created together with Boyar Value Group that focuses on companies with high potential and companies that have been “forgotten” by the market).