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As every quarter, the Spanish mutual funds have presented their periodic reports to the CNMV, in which is included, among other things, the portfolios at the end of the period. Usually, it is interesting to analyse the main investments of the value investing-oriented mutual funds, which are known for having extraordinary potential returns. Thus, here I analyse the first 15 positions of some of these funds, which can be found in a spreadsheet at the end of the post.

Among the selected management companies, they are included the most representative positions of AzValor, Bestinver, Cobas, Magallanes and Metagestión. Additionally, I include some independently managed mutual funds such as Japan Deep Value Fund and Valentum (from Gesiuris), Renta 4 Multigestión Numantia Patrimonio Global, True Value and Argos Capital (from Renta 4) and B&H Acciones Europeas (from Buy and Hold). Lastly, I consider two investment companies: Lierde (Urquijo Gestión) and Elcano Inversiones Financieras (Credit Suisse).

First, it is worth monitoring the three main stocks in each fund, which are those which the managers find more interesting. Even though this companies are not always the one with the largest potential, the are the ones with best risk-return relationship, which make out of them very interesting potential investments not only for individual investors, but also for other institutional ones.

Top 3 Value 4Q2017

In the Iberian funds, some positions are overlapped among the first investments. As an example, Elecnor is an important position for AzValor and Cobas, whereas Semapa is the first investment of Bestinver and Magallanes. Regarding the international (ex Iberia) funds, there is more diversity, as the market is wider, and the philosophy diverges among managers.

The other relevant issue to analyse is the concentration of the mutual funds. As it is well known, diversification is the main tool to manage risk. Yet, with overdiversification, outperforming the benchmark is impossible, so a little bit of concentration in the portfolios is always welcomed for the investor whose objective is to maximize his return. In this sense, the analysis is done taking into account the first 3, 5, 10 and 15 positions, with an average of all them as a synthesis.

Concentration Value 4Q2017

As we can observe, the most concentred funds are Elcano, the two managed by AzValor, Valentum and Cobas Iberia, in which portfolios, the Top 3 amounts for one forth of the total. On the other hand, the most diversified portfolio is B&H Acciones, followed by Lierde, Bestinver Internacional and Magallanes Microcaps, in which the 10 main positions weight less than a third of the total portfolio. On average, the Top 3 weights an 18%, while the average of the Top 3, 5, 10 and 15 is 38%. Every portfolio with larger percentage would be relatively overconcentrated, while those below the benchmark would be overdiversified.

Concentration Value 4Q2017 Graph

In addition, we can see that the Iberian funds are more concentrated than the international ones. If we analyse the funds run by asset management companies with different geographic strategies, we can notice that in all of them, without exception, the Iberian fund is more concentrated than the international portfolio. The reasons could be two: first, as it is a narrower market, the Iberian portfolios tend to be overconcentrated. Second, as managers frequently say, they know much better the Spanish market, so they feel more confident with a greater concentration in the best ideas, which they know deeply.


Portfolio Spreadsheet: Spanish Value Portfolios 4Q2017