Fixed income funds experienced in the month positive net subscriptions over 270 million eurivers, all of them focused on longer-term fixed income, according to the latest data provided by the Association of Collective Investment Institutions and Pension Funds (Inverco). Where it becomes clear that in 2019 as a whole, fixed income funds already accumulate almost 2.500 million euros of net inflows.
While on the other hand, international equity funds modified the trend of recent months and they experienced positive flows, helped by the behavior of the markets. However, despite their positive returns, they experience net repayments of over 1.800 million euros for the year as a whole. On the contrary, the absolute return funds and those with passive management maintained the repayments of the first half of the year, accumulating almost 2.100 million euros of repayments in the first and 605 in the second.
In a general context, where investment funds, supported by the good performance of the market in the month, experienced a growth in June of 3.711 million euros and, with provisional data, they closed the first half of the year with an increase of 10.688 million euros in their volume of assets, to stand at 268.203 million euros, which is 4,2% more than at the end of 2018. With a debate whether it is better to opt for investment funds based on a portfolio of equities or if on the contrary to opt for fixed income.
More profitability than fixed
At the moment, investment funds integrated into equities provide a series of benefits that may be more interesting to hire from now on. One of the most relevant is derived from the fact that its profitability may be higher than in fixed income. Also, at this time to get a more competitive interest rate it is necessary to risk in making decisions. And in this sense, the path to choose is in this sense in an environment in which the international stock markets have held up reasonably well.
Another contribution of investment funds integrated into equities derives from the fact that monetary stimuli are favoring markets with these characteristics. Both on one side and the other of the Atlantic. With the advantage that they can have several options to choose from and under different formats in the equity markets. On the other hand, there is a risk that a bubble in public debt which can affect fixed income investment funds with particular violence.
How to protect yourself in equities
In any case, you have several investment strategies to protect your capital from possible instability processes in the financial markets. One of these systems is combining equities with other financial assets. For example, those from raw materials, currencies or even alternative models. This management can help you contain losses in the most negative scenarios for the interests of small and medium investors. In this sense, there are investment funds that meet this special characteristic.
Another of the strategies that you can use from now on is the one based on opt for active management. What does this really mean? Well, something as simple as adjusting your investment fund portfolio to all possible scenarios, even the most negative for your interests as a retail investor. Adjusting your portfolio with a certain frequency so that you can make the savings more profitable. You will see that the performance is getting better and better if you follow this strategy in the management of investment funds. For this you have many of these financial products that provide this special feature. Without affecting the commissions that these commission funds apply.
Equity risks
On the other hand, we cannot forget some of the inconveniences that opting for this investment model generates. One of the most relevant is that a collapse in international stock markets, with depreciations above 20% or 30%. To the point that you would leave a lot of euros on the way and in a very short space of time. Another of the risks of using this system in the choice of financial assets is due to the fact that corrections may be generated in the coming months, or rather, very important cuts in the conformation of their prices.
To the point that we can see prices much lower than those that are quoted at this precise moment. With falls in the financial markets between 10% and 20%, which would be more or less the percentage of money that we would leave in the operations in the stock market through investment funds of these characteristics. Another risk we face is the fact that a ceiling has been created in international indices that will be difficult to overcome in the coming years.
The stock market is more profitable
In any case, it must be taken into account that investment in the stock market is usually more profitable for the medium and long term periods. Where it is usually revalued above fixed income derivative products or made by the banks themselves. At a time when the common denominator is the cheaper price of money.
This is a very important factor that undoubtedly helps you improve in the equity markets. Because it means that there is more money to make profitable in the stock market and this helps the operations in these financial assets. Although this is a trend that can surely end in the first part of next year. And that therefore, it would be noticed in the share price. Another risk we face is the fact that a ceiling has been created in international indices that will be difficult to overcome in the coming years.