At last someone is speaking clearly and openly on the subject. And, of course, the information had to come from COBAS AM. Here is a summary of some of the paragraphs we consider most interesting from the article signed by Gema Martín Espinosa, which you will find below in this link to the Cobas blog. A bolg that you should certainly follow closely, and in which we have had the opportunity to publish some articles in which we talked about the differences between passive and active management (yes, now that ETFs are so fashionable).
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So let's look at the real reasons why many Spanish independent fund managers, all international fund managers and most investors shy away from the Spanish fund format for their investment vehicles:
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«The essential thing for the investor to know is that when a fund manager offers both Luxembourg law funds and Spanish law funds, it is in fact the same product. In other words, the same management team, the same philosophy, the same investment process and the same portfolio.
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The differences come from the other actors that a collective investment vehicle must necessarily have. In both cases a custodian bank is necessary, and some investors, faced with political uncertainty or instability in their country, choose to invest in a fund whose assets are deposited in a bank in Luxembourg rather than in a local bank (...)
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With the European passport, it is true that you can choose to incorporate funds in Ireland, Malta or other EU countries, but over the years the Luxembourg brand has led the biggest flow of funds for cross-border distribution, not only in Europe, but also in Latin America and Asia.»
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Here it should be noted that Spanish and Luxembourg funds are governed by the same directives, either the well-known UCIT (for plain vanilla vehicles) or the lesser known AIFM (for alternative or professional investor vehicles). The crux of the matter is that investors from outside Spain cannot invest in Spanish funds through omnibus accounts., The use of the new technologies, which are widely used in the rest of the world.
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«What are omnibus accounts and why are they so relevant?
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The holder of the omnibus account is the trading entity and not the final customer of the account. It allows the total of customer subscription and redemption orders to be transacted in a single transaction, without the customer's details being known or shared (...).
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The financial institution issues a global order for each fund manager. Likewise, end customers do not open an account with other fund managers, but can access third-party funds through their marketing entity and from their own account.
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Since Spanish funds are not marketed through omnibus accounts, the international investor must necessarily open an account with a marketing entity in Spain or with the fund manager itself in order to invest.
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This operational barrier makes the Spanish fund very unattractive to international and institutional investors outside Spain, which is why several fund managers choose to manage the same fund in Luxembourg in order to give access to foreign clients.
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These accesses are usually provided by international platforms, the vast majority of which do not contemplate operations with funds under Spanish law because they cannot comply with the requirements of transferring the details of the end investor in the operation. In addition to the platforms, European central depositories and custodians provide direct access to institutional clients by operating directly with the transfer agents or fund managers.
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The lack of omnibus accounts in Spain also has a negative impact on Spanish fund managers when marketing their funds through other entities in Spain. And this is fundamentally for two reasons.
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The first, and most powerful, is that the largest Spanish fund managers are part of banking groups with distribution networks (branches) where it would be impossible to think of them offering a competing product.
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Secondly, even if the barrier of selling competing products were overcome, the fact that the marketing of a Spanish fund would necessarily involve transferring key data on unit-holders to the fund manager would come into play.
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Although it is the fund manager who would receive this data and would be subject to the strictest confidentiality and non-use of the data, in general the fear of transferring client data tends to block definitively the marketing of Spanish funds by third parties in Spain.
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For this reason, some Spanish independent fund managers choose to manage only Luxembourg funds, which are then marketed in Spain through third parties and cross-border through marketing agreements with platforms and distributors, thus resembling an international fund manager which, curiously, Spanish distribution networks do not perceive as “competitors”.
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It is also important to dispel legends and myths. A Spanish fund is no better or worse than its Luxembourg brother.. Both are options that asset managers offer to respond to their clients as a whole, and have nothing to do with tax havens, high net worth or the “glamour” that is sometimes implied by their English names (...)».»
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The advantages of investing from Luxembourg personal vehicles and banks is clear about doing it from traditional Spanish banks, with or without a sicav, but we have already discussed this at length in the article: «...".«The advantages of investing from Luxembourg«.
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We hope that this post will finally help to clarify the issue. By the way, to differentiate at a glance between a Spanish fund and a Luxembourg fund, it is enough to look at the first two letters of its ISIN code: ES (Spain), LU (Luxembourg), IE (Ireland), FR (France), HK (Hong Kong), US (United States), etc.