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04/30/2020

March A.M. has identified opportunities in mega-trends, family businesses and fixed income

  • The asset manager has emphasised the importance of using a medium- to long-term approach to harness any potential opportunities. 
 
March Asset Management (March A.M.) , the Banca March Group's asset manager, has pinpointed the areas that could stand to benefit as the economy recovers from the crisis triggered by Covid-19. Three broad areas offer the most compelling opportunities: future mega-trends, family businesses and fixed income (see here for the full March A.M. Market Strategy Report and the video by Board Member and MD José María Ortega).
 
The experts at March A.M. expect to see large-scale transformations that will generate opportunities linked to demographic change (population growth and ageing, increasing urbanisation), consumer habits (prioritising health and e-commerce), and environmental protection (sustainability). Channelling investments into these opportunities is intended to afford stronger growth prospects and more compelling returns than a traditional investment approach. Diversification is crucial, and one of the most efficient ways to diversify is through investment funds.
 
In March A.M.'s view, the current landscape has generated stronger support for sustainable companies, further underpinned by the European Green Deal project backed by various Member States. This initiative is likely to give rise to increased subsidies for sectors like renewable energies, which will be one of the key drivers behind Europe's economic recovery.
 
Family businesses
 
Several studies by March AM and IE Business School have shown that in the countries analysed, family businesses outperform the local indices in their markets, generating far higher returns than their benchmarks with similar or even lower risk levels. According to these studies, over the time periods analysed, family businesses proved more profitable than their non-family peers with higher levels of ROE, thanks to their long-term outlook, controlling shareholders and lower debt levels.
 
It is reasonable to expect that the Covid-19 crisis will impact family businesses to a lesser extent than other companies, and could even open up certain opportunities: many businesses with positive net cash positions will be able to undertake acquisitions without suffering liquidity issues. Against the current backdrop, there are also limited opportunities to invest in quality names such as Roche, Walmart, Berkshire Hathaway, Oracle, Remy Cointreau, Sodexo and AB Inbev, among others, at attractive prices. According to the fund managers at March A.M., family companies are able to bounce back from crises more quickly than non-family enterprises, and tend to come out much stronger.
 
Fixed income opportunities
 
Unlike in 2008, central banks are currently rolling out the measures needed to ensure the financial sector is not impacted, which means there is an opportunity to harness price inefficiencies in the credit market.
 
The monetary and fiscal stimulus measures adopted in Europe and the US, featuring unprecedented bond buying programmes including credit, have provided robust support for the fixed income market, with a drastic tightening of yields driving up bond prices, and have provided the liquidity the market so desperately needed in mid-March.
 
José María Ortega, Board Member and Managing Director at March A.M., said: “In situations like the present, it is important to apply a medium- to long-term approach to identifying investment opportunities in the financial markets. The March A.M. management team has demonstrated remarkable consistency in outperforming both economic cycles and occasional shocks, generating compelling returns for investors over the long term.”
 
Two strong examples of this consistent outperformance are The Family Businesses Fund, which invests in listed family companies and posted returns of 47.72%* over the five years to 31 December 2019, and the Mediterranean Fund, focused on the oceans economy, water and ESG investment criteria, which gained 6.90%* between its launch in September 2019 and 31 December 2019. Fonmarch, Spain's longest-standing fund, was also able to generate positive returns in 2008 and 2009, both highly volatile, complex years for the markets.

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