Renta 4 Megatrends Ariema, Azvalor Managers and Cobas Internacional … spectacular returns in the last 12 months that must be qualified

Many investors are fascinated by the high returns seen in the last 12 months in international equity mutual funds that have been favored by the reactivation of the supply and fiscal stimulus programs via debt.

International equity funds are offering returns of around 40% during this period. And among them, we must highlight the fund Renta 4 Megatrends Ariema Hidrogeno Y Energias Sostenibles with a profitability of 99.76%, leader in this category, according to the data provided by Invesco until the end of October.

At the same time, the funds of leading independent asset managers such as Azvalor Managers (969 million euros), and COBAS Internacional-C (478 million euros) have shown a profitability of 85.11% and 82.26% respectively.

Without a doubt these are spectacular returns, but must be contextualized. And it is that the investor must ask himself how these returns have been incurred and differentiate if it is by integrating values ​​in the portfolio with extreme volatilities or it is a merit of the management.

The first thing we must ask ourselves is whether the management of these financial products add value or not. That is to say, outside of conjunctures, structurally the manager is doing well. To do this, we must analyze the generation of alpha, that is, the profitability differential against the benchmark.

This is the first filter that every investment fund must pass. Otherwise just we have the option of investing in the index through passively managed funds or ETFs.

As we have mentioned, the fund that has reported the most to its participants is Renta 4 Megatrends Ariema Hidrogeno Y Energias Sostenible, a sub-fund of Renta 4 Megatrends. It is no coincidence, and it is that expectations have skyrocketed in hydrogen-related companies, despite having complicated fundamentals with a history of negative operating cash flows.

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The sector is experiencing its boom and this Spanish fund has positioned itself exclusively within this category. But, despite a profitability close to 100%, you have to be careful … First of all it is a newly created fund so its track record it is rather rare. Subsequently, S&P Global Clean Energy TR has been accompanying, so there is no notable differential for management. Moreover, in its short life, it generates a negative differential of 4 percentage points against the index.

Next, let’s look at the case of Azvalor Managers. This product is one of the best of this year, and something similar to the previous one happens to us … short track record and in this time does not generate value compared to its selective reference, the MSCI ACWI (incorporates developed and emerging countries).

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Although the fund has posted positive returns since it began, the investor would have achieved better results with the index, as The fund offers a cumulative return of 37%, but its benchmark offers 58.9%… little more than 20 points of differential in almost three years.

Lastly, let’s take a look at Cobas International. A product that adopts the Paramés value philosophy and has shone among its competitors in the last 12 months. With a profitability above 80%, the truth is that its net asset value is at the same levels as October 2018, worst of all, is that in a bull market, the value of its shares has not recovered its levels of the beginning of 2017.

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Its benchmark index to which it is linked, the MSCI ACWI SMID NR USD, has reported a cumulative return of 63.7%, but the fund is losing 15% in this time, a difference of almost 80 points.


Source: El Blog Salmón by www.elblogsalmon.com.

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