After months of rate cuts and positive inflows, the Peruvian mutual fund industry anticipates a strong 2024, and BBVA Asset Management is no exception. Leading the increase in AUM, according to the firm’s CEO in the country, Antonio Cevallos, the company is focusing on expanding the affluent segment through a comprehensive advisory model they call “prime banking.”
“We are the leaders in YTD growth, with over 25% growth in total AUM. For five months, that is a quite significant number,” the executive stated in an interview with Funds Society. One of the differentiating factors, he added, is that they reinforced their offering for the affluent segment, which they had previously only promoted “timidly.”
“We are putting a lot of focus on our affluent banking, prime banking,” he explained, adding that this involved a relaunch of the segment and a new internal structure. Rather than increasing their commercial or financial advisor workforce, the top executive described it as “creating not-so-large teams of advisors with more of an investment bias to support these prime bankers.”
Thus, with a mix of technology—anchored in the BBVA app—and advisors who incorporated more investment products into their portfolio, the firm redefined its offering for clients with a “more holistic focus.” The firm’s strategy is to offer financial and non-financial products, “with an advisory nuance,” through a team of specialized bankers and advisors.
The Conquest of the Affluent
For BBVA, this client segment includes those who fall below the traditional private banking range, which they designate at over $500,000. On average, Cevallos described, they handle between $100,000 and $150,000. The asset class bias, meanwhile, leans towards cash and fixed income.
And the results justify the effort. Of the net flows accumulated this year, around two-thirds come from prime banking. “It is a segment that has captured a significant portion of the AUM and is bearing fruit,” stated the CEO of the asset manager, adding that clients are valuing this “more holistic” proposal.
Moreover, it is a category with growth potential, according to BBVA AM. “In all mutual funds, our total number of clients is over 100,000,” he explained, while for the prime segment, they have “mapped” 35,000 clients.
This aligns with the historic strategy of the Spanish parent company, which has previously ventured into attracting retail investors. “We have been strong there and have gradually climbed up the pyramid,” the professional commented.
Other Focus Areas
Another segment they are looking at with interest is corporate clients, which involves managing companies’ cash.
“At other points in the cycle, they have been quite significant,” Cevallos described. During 2021 and 2022, the spread between funds and time deposits led companies to banks. Today, however, “we have started to see a return at the system level,” he said.
Currently, the segment values that mutual funds offer more diversified products with different terms. “That allows us to stay above what a traditional deposit offers,” at a time when mining companies, for example, which are significant in the Peruvian market, have “significant surpluses” due to a positive cycle.
At the product level, they are focused on defined-term products, mainly in dollars, taking advantage of the interest rate situation; and on complementing their product portfolio in currencies, terms, and global strategies, particularly in fixed income in dollars.
