Following last week’s announcement by Mapfre MSV Life plc that they are paying a “bonus” of 2.5% to some of their clients holding money in some of Mapfre’s profitable funds, retail clients should be informed of the full facts.
Firstly, Mapfre has a conflict of interest in acting as a financial advisor given that they hold their own funds and services which they promote and sell to retail clients. Clients should be able to distinguish between a financial advisor who has no conflict of interest and a fund manager whose interest is to take your money and grow their fund.
Secondly, retail clients buying into MApfre’s MSV Life funds should be aware that these funds are grossly under-performing markets. While the S&P500 and the NASDAQ made more than 10% from year to date, Mapfre is announcing an 8.6% return. The Euro500 made 7.2% and the German DAX made 10.3%.
Mapfre’s products don’t work like conventional funds where you handover your money to a fund manager, and the fund manager charges you a small fee for the returns made in investment. Inversely, Mapfre’s funds are based on a model where the fund tries to capture most of the profits and returns itself while providing small returns to the holder starting from 1% to 4% per year, and only in case if the fund is in profit.
Retail clients should also be aware that these kind of funds being promoted by Mapfre are nowadays becoming ever more rare given that they are some of the least profitable financial products available. Even a European government’s bonds and US treasuries will easily give you more than 2.5% annual return, risk-free. Fund managers who do their job well and that run conventional funds, that is, by giving back most of the returns to their clients, are killing it this year with markets at all time highs and are making returns much higher than the market itself. Good fund managers beating the market this year have made at least 10% year to date and even up to 30% from last year, and even these figures are considered low as compared to the performance of major stocks.
After taking a look at the funds that Mapfre are promoting to their clients, it clearly shows that their funds are grossly under-performing and failing to provide significant returns. Surprisingly, they are also promoting exotic products such as Asian equity funds, which is strange given that retail clients are not often promoted high-risk investments like these. Mapfre has also had problems in finding fund managers to manage their funds, a problem they shared with other local fund managers who can’t find their preferred highly-skilled and qualified locals to run their funds.
Of course, I am not a financial advisor, and I am not providing advice to anyone. I am only publishing facts that are in the interest of retail clients to ensure they are fully aware of all the facts behind these products.
Website Editor
Historian and Publisher
Leave a Reply