Spanish asset manager Mapfre has launched the Mapfre AM Behavioural Fund, which aims to exploit pricing inefficiencies in European equities caused by the behaviour of market participants.
Mapfre said it has developed a proprietary methodology for identifying opportunities caused by investors reacting to new information in exaggerated or irrational ways.
The managers then apply detailed fundamental analysis to determine whether these equities represent attractive long-term investments, the group says.
The Luxembourg-domiciled fund will be managed by portfolio managers Luis García and Michael Morosi.
Álvaro Anguita, CEO of Mapfre AM, said: “[We] have identified a set of circumstances in which certain cognitive biases have a tendency to make stock prices deviate significantly from their intrinsic value, offering a margin of security to invest cost-effectively, and at lower risk, over the long term”.
“Understanding why market participants behave as they do is an important aspect of asset management and a great tool for those that follow a value investment philosophy,” he said.
Advisory board
The managers’ investment process will be supported by an advisory board composed of experts in the field of the behavioural economics, the group said.
The team is made up of Natalia Cassinello, professor of finance of The Universidad Pontificia Comillas; Pedro Rey Biel, Professor of Economics at ESADE; Pedro Bermejo, Neurologist at The Puerta de Hierro University Hospital of Madrid and President of the Spanish Association of Neuroeconomics; and, Guillermo Llorente, MAPFRE’s General Director of Security.
Álvaro Anguita said, “We have brought together a great team of committed people who will help us integrate the finances of behaviouralism into our work as value investors “.
The fund, which is the first of its kind to be launched in Spain, will seek to invest primarily in companies that have a simple business model, are capable of generating cash, have a sustainable competitive advantage, a low level of indebtedness and, in many cases, managed by the founding families whose interests are well aligned with those of their shareholders.
The fund will be distributed mainly in Spain and France and will be domiciled in Luxembourg, so that it can be available to other international investors.
