Diversification enables non-systematic risk to be reduced

The investment fund boom in Spain began in the late 1980s. This was due to the growth of the economy, which led to unparalleled savings levels, and to the high interest rates at that time, which encouraged the risk appetite; and added to the  subsequent legislative changes, that rendered investment in funds and other UCITS  tax advantageous – the investor only pays tax on redemption, and may therefore ‘jump’ from one vehicle to another at no fiscal cost-, since the end of the 1980s in Spain we have experienced a boom in investment in funds, investment institutions, pension plans or unit-linked plans, among others.

We started our business in 2006 and, since then, our pursuit of new assets to provide diversification through investment managers with proven track records has been relentless: from the most general categories of fixed income and equities or more specific market niches to, more recently, carefully selected illiquid products where diversification still plays a crucial role.  

The answer is easy: investment funds are the best formula to make the most of the advantages of diversification in investments. When an investor invests in funds, what he/she is actually doing is handing over the money to a manager who, in turn, invests it in any of the infinite strategies for investment in assets, markets, geographical regions.