“The sustainability be password when bet for investments future”

Belén García-Moya, director of counseling and high heritage of BBVA Private Banking, explains the importance of the megatendencies in BBVA's investment proposal in the means and long term.
Go to Perspectives 2020

What criteria owes have a trend for call our attention? All the tendencies can represent a good investment opportunity or what aspects have to take into account for identify them as such?

In BBVA Private Banking combine the techniques of traditional management with new tendencies of portfoliomanagement. The objective obtain a perspective different, with a great diversification and descorrelación in the portfolios.

For achieve it, use traditional management tools of portfolios with which look for, through the diversification, combinations of assets with goes down correlation that decrease the total risk of the portfolios. Additionally, combine the management active with the passive one, choosing the first in those markets and/or sectors where is possible beat in a consistent way to the reference rates. In more efficient markets us decant for the second, that looks for reply the behavior of these reference rates. At the same time, have built in new factors or risk premiums as generating sources of profitability, giving entrance to the Smart Beta or Factor Investing as complement to the management traditional.

Similarly, in BBVA Private Banking have built in the megatendencies to our management models , what us is giving ones retornos adjusted to risk of very high quality. This owes to that live in a world in constant evolution where the technological progress, the digitizing and the increasing access to the big dates have convert to these megatendencies in new engines of the growth global. The thematic investment looks for capture that growth identifying the models of business and the companies that profit from these tendencies. Invest being based in them supposes participate in your success, what does that one of the main challenges is, precisely, identify these winning tendencies and the companies that see incumbents. For this reason us seems suitable the diversification in several subject matters that have the smaller overlap possible and the great complementarity between yes.

In short, believe that the secret of a good management is generate value for the customers, so much from a point of view of ‘Asset Allocation’ as through the selection of values within every kind of asset. As for the own one ‘Asset Allocation’, owe go beyond the approach traditional and include diversification between different styles of management and tendencies, for improve additionally the profitability adjusted to the risk. Already within this outline, in the part of selection of assets, is basic search outputs idiosincráticos, that find many times in companies that are pioneers in aforementioned megatendencies and that can obtain retornos well above of those ones of the market as a whole.

Why the sustainability be password when bet for the investments future? In what measure?

In BBVA, the sustainability is a priority. Aspire to that all our services and products offer a solution sustainable. On the one hand, because have very clear that the 17 Objectives of Sustainable Development of United Nations , the ODS, suppose a transformation of the same importance that the digitizing in which, moreover, us play a lot more. Actually, the companies and sectors that not are aligned with the ODS have more probabilities of suffer financial problems, penalties in litigations, imposition of sanctions and risk reputacional, reducing your appeal for the investor. On the other hand, because is studies that show a correlation positive among the work experience programs in sustainability and the financial results as for profitability adjusted to risk.

All in all, the sustainability be able to be the third axis on the one which base the analysis of any investment and that come to substitute the traditional binomial profitability - risk, that pass to include an impact factor and become a trinomial one (profitability - risk - sustainability).

How can make good use of the retail investor all these changes for carry out a good investment? And in this respect, which be major tendencies or opportunities of investment in this just released 2020? And in the medium term? 

To the talk of tendencies, not can have a vision of short term if not that, for the natural world of the same, us owe relate necessarily to a medium term

Before all, remind that the thematic investment consists of invest in assets that involve exhibition to some trend of long term with the aim of obtain a profitability higher than the one which achieve with an investment employing a reference rate traditional. Additionally can consider as thematic investments those that chase a concurrent objective to the profitability economic, as can be have an impact in terms of ESG (environment, social and good governance corporate).

In what subject matters bets BBVA Private Banking as opportunities of investment?

Investment sustainable (of impact). The social, political and financial pressure for fight against the climate change is intensifying. Some details to take into account be:

  • For limit the global warming to 1.5 degrees additional owe achieve a society with zero issuances in 2050.
  • According to a report of University of Cambridge, be able to have losses of 7% of the GDP global in 2100 if not take additional actions on the issuances of carbon for face to the climate change.
  • According to the item of the OECD “Investing in climate investing in growth”, a policy package public compatible with the climate can increase the GDP long-term in up to 2.8% (on average in all the countries of the G20) for 2050, continuing with the policies current. But if also take into account the positive impacts of avoid the climate change, the net effect on the GDP in 2050 increases to almost 5% in the economies developed and emerging of the G20.  

Owe have very current the increasing demand social, that is asking for a transformation definite of the economic model . In order undertake it and reduce the deterioration that the climate change is causing in our planet go to be necessary enormous amount of financing and of investment, so much to public level as private. The winning companies in the long term be which make up in your value chain the clean energies .

All of this joined to the increasing interest on the part of the investors of align your interests financial with your personal convictions and your values, do of the Sustainability a clear investment opportunity.

Technological revolution in the finances. The technology digital already has transformed the relationship and way of act among customers and financial institutions, modifying the structure, the operation, the management, the behavior and the proposal of value of the financial sector. The speed and disrupción of the technological changes in the business of the traditional banking is transforming the industry financial and us are giving interesting opportunities of investment. Just the financial institutions with skills in order undertake all fast changes that are producing be the winners. 

Does necessary that follow investing in technology in the next few years for face to the entrance of new competitors in the market, the evolution of the fee-paying means towards what is digital, the contracting of all kind of financial products online, etiquettes of storage and data transmission new and disruptivos as the blockchain, the financial advice digital (for example with the theft advisors), etc. All of this without forget the requirements of security and the normative and regulatory requirements that the adaptation to these new technologies entail. Therefore see the technological revolution in the finances as a subject matter of enormous interest.

Technology applied to the security. In a more and more globalized world and complex, the security is returning more and more important. The approach of the industry of the security is help to protect thealth, the privacy and the well-being of the people all around the world . All on the occasion of an increasing worry, so much at the level of governments as of companies and to particular level, for all it related to this security.

On the one hand, the new technologies open new needs of computer security , of means fee-paying, of data protection, advanced systems of driving self-employed worker of vehicles, etc.  For another, the growth demographic and the urbanization global compel to reinforce the physical security, the food security and the services of people security (public transport, infrastructures or events popular).

Is a trend with a very important potential for growth since feel insurance and to except for is a need basic of the human being. Moreover, the regulation supports the security in response to the threats of the modern world and globalized. 

Therefore, the investment in Security us seems very interesting.

Consumption Sustainable. The definition preferred for the end consumption sustainable is the proposal in the Symposium from Oslo in 1994: "the use of goods and services that answer to needs basic and give a finest quality of life, at the same time that minimize the use of natural resources , toxic materials and issuances of waste and pollutants on the cycle of life, so that not put on in risk the needs of future generations ".

Are producing many changes around the consumption as, for example, the change in the consumer rules of the next generations , a great sensitivity to the environmental impact and print of the companies producers or the change of tastes on the part of the consumer.

But not only the consumers are more and more demanding with the behaviors people responsible for the companies, demanding also that them is facilitated the right information through the etiquetaje, characteristics and norms of use of the products. Additionally the regulation is being more and more strict, introducing taxes and imposing sanctions.

The companies able to move forward and lead these changes, be the winners and leaders of your industry. The objective of the consumption and the sustainable production is do more and better things with fewer resources. The companies that get right in how approximate to these issues, differentiate of the responsibility so much to eyes so much of the consumers as of your own employees. 

For these reasons think that the consumption Sustainable has a major potential for growth.

The longevity. The life expectancy and the maximum age of human beings not has stopped of grow during the twentieth CENTURY. The majority of the children born in wealthy nations today can expect live more than 100 years. However, this trend has gone slowing down in the last few decades, decreasing considerably the chances of survival from the 100 years. According to a carried out recent survey for researchers of the ‘Albert Einstein College of Medicine of New York’, the limit of longevity has been reached and ends to the 115 years.

Nonetheless, the longevity constitutes one of the great transformations of this century. Every time is more consciousness-raising of that a more healthy way of life is the password: a balanced diet, do exercise with regularity, take care the environment, etc. Moreover, is very important be optimist.

Actually, a recent survey of the University from Boston (published in the Proceedings of the National Academy of Sciences magazine) has concluded that there is a correlation positive between be optimist and live more time.

The companies already are starting to react before these changes imminent, betting for processings, cares of the senior citizens, well-being or leisure for great.

This means that invest in health, and more specifically in longevity is another of the opportunities of investment that us seems of great interest.

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