Last Thursday, the European Central Bank (ECB) cut official interest rates by 0.25 basis points again, reaching 3%. It is the fourth cut this year, which, according to market consensus, marks a clear trend for 2025. In the coming months, with inflation allowed, new drops are expected that could take the price of money in the area euro at levels around 2% or even below. For Almudena Mendaza, head of sales for Iberia at Generali Investments, “we are moving, after complicated years, towards a normalization of interest rates: not excessively high, not even in the negative.” Mariano Guerenstein, deputy director of Institutional and Wholesale Clients for Iberia at J. Safra Sarasin Sustainable AM, clarifies that, although this rate cut process seems established in Europe, “perhaps it is no longer so evident in the United States where it can be produce a certain slowdown in this downward trend, given greater than expected economic growth, with its corresponding impact on prices.» Whatever the speed of the decrease in interest rates, the times for the most conservative investment , with acceptable returns, even above inflation, they become complicated, according to experts. Despite this, there are still good investment opportunities for the most risk-averse pockets. Víctor Alvargonzález, strategy director of the independent financial advisory firm Nextep Finance, believes that now is the time to take positions in fixed income funds “who can benefit from the high long-term interest rates on the assets they have in their portfolio and also from their possible revaluation via prices by precisely lowering interest rates.” The profitability that could be obtained would be, according to their estimates, between 4%-5%. He believes that this is a more attractive option than target performance funds which, in his opinion, are not always liquid, lose the margin of possible revaluation and can have high fees.
Long term returns
André Themudo, from BlackRock's Iberia team, considers that, in a framework like the current one with interest rates, although higher than in pre-pandemic times, but significantly lower than a few months ago, the conservative investor, always under the umbrella of a clear long-term strategy, has at its disposal alternatives such as defined-maturity funds, which “offer predictability of returns over a certain period of time,” fixed-income funds themselves “which will incorporate somewhat less or more risk as try of corporate, investment grade or high yield securities” and funds specialized in private markets. Of the latter, Themudo emphasizes that they are usually illiquid (punctual repayment windows) but that «in exchange, and always with a minimum investment horizon of between five and eight years, they can offer returns above the average, at the same time Guerenstein is also committed to fixed income funds, although he specifies that the duration of his portfolio must be between three and six years to obtain something of value. and “In any case more than what can be expected from the Treasury bills that will be issued in the coming months.” To this “traditional” offer it adds another somewhat less known one: these are funds specialized in sustainable debt bonds from insurers that, “by having a higher level of complexity, offer significantly higher profitability than their peers with a duration equal to or similar». The profitability objective of this product is close to 5% over a period of 3.5 years. For his part, Mendaza maintains that, although it is possible that in the future they will lose part of their attractiveness, monetary funds will continue to be adequate to manage liquidity peaks. In fixed income funds, he believes that there is still time to bet, to achieve adequate returns, on private debt, with investment quality. Although it is possible, in his opinion, that higher returns can be obtained in American securities – «the reality is that valuations have been adjusting» – he does not recommend investing in a currency other than the one in which the income is obtained. regular. In the case of a Spanish investor, the euro. For those responsible for the management company Panza Capital, the opportunities are not exactly in fixed income or similar, except in the short term. They explain, it should not be the interest rates that determine the destination of the investments, but rather the term. From his point of view, precisely now that interest rates are falling, “the best option, if the time horizon is the long term, is simply variable income.” In his opinion, investing in good companies, at reasonable prices, is the best way to preserve capital and make it grow in the long term. “With high rates or low rates, equities do better in the long term” they conclude. Aside from all these conservative investment opportunities, there are prudent savings opportunities. There are the deposits that, depending on their terms, offer rates between 2% and up to 5%. The highest ones are usually linked to other products or are of specific duration. The ranking of the best remunerated accounts of December 2024 is led by the Trade Republic Account of Trade Republic (3.25% TIN), the Smart Account of EVO Banco (2.81% TIN) and the Save Account of B100 (2.67% TIN), according to the analysis of the Kelisto price buyer. If you are willing to meet certain requirements, the accounts with the highest remuneration with payroll direct debit reach 5%. This is the case of the Ibercaja Vamos Account, which offers a 5% TIN the first year and a 3% TIN the second, but only for the first 20,000 euros. Or also the Vivid Money Standard Account which, according to Kelixto, gives a 5% TIN during the first two months and, from the third, a 2% TIN indefinitely and for balances of up to 100,000 euros.