Investing in the stock market generates very curious ideas in people’s minds. The cinema has told us very bizarre and wacky Wall Street stories, some of them true, no doubt. Insider trading, audacity, or just very smart people in suits staring at charts and guessing what a certain company was going to do.
However lately the reality is much more boring. Passive investing is succeeding, even in countries like Spain. What Indexa Capital exceeds 1,000 million euros managed is a milestone and shows us how Roboadvisors are eating the market around the world.
It all started with Bogle
John C. Bogle He was an American investor who undoubtedly changed the course of investment. Initially he worked for a traditional mutual fund, but in 1974 he created Vanguard Company with a game-changing idea: Instead of trying to beat the market with a bold stock selection, I’d just replicate it.
This is how they arose index funds, which simply invest in all the companies in the index that they are trying to replicate. An idea that in its day was quite shocking, since it was to stay with mediocrity instead of trying to beat the market.
But in practice it is a revolution. If you look at the data, very few managers are able to beat the market. And continuously the list is even shorter. And to achieve this, these funds incur very high expenses.
Indexed investing started with Bogle and his company Vanguard
Bogle’s idea with his Vanguard index-tracking funds was that doing this replication is very cheap– You don’t need a horde of analysts to study companies, just a few executors to follow the index. That extra return provided by lower expenses in the long term ends up beating almost all active funds on the market.
This type of investment is often called indexed (for obvious reasons) or passive, as opposed to the active management that requires the work of a group of experts selecting companies in which to invest.
Even in passive investment, you had to choose where to invest
However passive management still requires certain decisions, such as which indices to invest in or what proportion of fixed or variable income is selected.
In the end the individual investor who invests in indices You have to do work on a personal basis to ensure that your investments are diversified, not only in many companies (this is already done by investing in an index) but also geographically or by sector.
Roboadvisors unite the good of indexed management and active management
It is not until 2008 when they appear on the US market the first roboadvisors. These provide the client with a combination of passive funds to invest in with appropriate proportions to the client’s age and risk profile. In addition, they also carry out rebates, that is, if the share of equities rises a lot, they sell part of these funds to buy equities and keep the proportion stable, and vice versa.
With this type of structure you have the best of both worlds: the peace of mind that the investments are well structured and diversified (as in a good active investment) and the low costs and profitability of passive investment.
The indexed arrive in Spain
It is not until 2015 when this indexed and structured investment arrives in Spain, precisely with Indexa Capital. Soon others emerged, such as Finizens, Finanbest or Inbestme, but Indexa took the lead in terms of clients and amount managed.
They are all quite similar to what started in the US in 2008: on the one hand profile the customer with a series of questions. In this way they determine if they will be able to withstand a little more volatility in exchange for greater profit potential. And once the profile is assigned, they invest in index funds in certain proportions. When these proportions vary, due to the fluctuations of the market, they carry out rebalances to equalize the proportions again.
Index Capital triumphs in Spain
Some days ago Indexa Capital exceeded 1,000 million managed in Spain. In just 6 years it has become the second independent manager (not linked to a bank) with the most clients in our country.
And it is not surprising: in the profitability rankings it stands out, its commission decreases as they increase in volume are constant and the volatility is quite reasonable.
And not only that, but since 2020 it is a company with benefits, which helps the sustainability of your investments. In fact, it is the only spanish roboadvisor with benefits and surely one of the few in the world, since most roboadvisors are in a growth phase and prefer to “burn” capital to make themselves known. Indexa CapitalIn this regard, it is somewhat more conservative, trying not to carry out capital increases and reinvesting profits to grow in a less urgent way.
The future of investing
Indexa Capital shows us what the future of investments looks like: with products structured according to profiles, with portfolios based almost exclusively on index funds and relatively low costs so as not to reduce profitability.
The wolves of Wall Street are old-fashioned. The investments of the future will be boring, they will not give to make a Hollywood movie, but of course they will be profitable and with few surprises.
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