Reuters/London/Madrid


One of Spain’s leading fund firms, Bestinver, lost almost a third of its assets in 2014

after star manager Francisco García Parames left, becoming the latest industry player to

fall foul of so-called ‘key man’ risk.
Parames, who co-ran most of the firm’s main funds, resigned at the end of September after

25 years with the company and two key managers, Álvaro Guzmán de Lázaro and Fernando

Bernad, followed him on Monday.
Through a spokesman, Parames told Reuters he had left after disagreement over the

strategic direction of the firm, which wanted to broaden its investor base while Parames

was keen to focus on core investors with large levels of liquidity.
Bestinver also wanted to branch out into fixed income, a letter from its chairman to

Parames showed, the spokesman added, a move Parames did not support. Bestinver would not

comment on the reasons for Parames’ departure when asked by Reuters.
Bestinver, owned by Spanish conglomerate Acciona, saw its managed assets fall to $5.7bn at

the end of December, from $8.2bn a year earlier, Lipper data showed, a slide of 30%.
The bulk of the outflows for all of Bestinver’s funds occurred from September to the end

of December, the data also showed, with the flagship Bestinfond Fl fund losing more than

$750mn in assets during September and October.
The ability of an exiting manager to trigger a rush for the investor exit has been seen

several times in recent months, most notably when Pimco founder Bill Gross left, taking

billions of dollars with him to his new company.
Javier Sáenz de Cenzano, director of manager research in Iberia and Italy for Morningstar,

said all Bestinver’s products under coverage had been downgraded to ‘neutral’ from ‘gold’

after Parames left.
“We do think Paramés and the other two co-PMs (portfolio managers) had critical importance

in the successful track record Bestinver funds generated over a very long time period,” he

said.
“They were key decision makers in a process where bottom-up fundamental research on stocks

was the main driver of returns.”
Parames adopted a value based approach to his investment decisions, a style favoured by

peers such as Warren Buffett, which tries to spot under-valued stocks hoping they will

rise over the mid to long-term.
The Bestinfond FI fund gained 65.4% in the five years to the end of 2014, Lipper data

showed, compared with a 31.2% rise in the Euro Stoxx 50 index during that period, with

dividends reinvested.
The company’s own estimate of the assets that have left its funds, given in an internal

presentation seen by Reuters, amount to €2.8bn ($3.3bn) between September 23, the date of

Parames’ resignation, and November 30.
Bestinver said, however, that much of that was down to institutional investors who had a

formal obligation to withdraw funds if management changed. Norges Bank Investment

Management was one such investor, Morningstar’s de Cenzano said.
Outflows have normalised since the beginning of November, Bestinver said. Lipper estimated

that net outflows from all Bestinver’s funds in December were $285mn.
Performance in the main Bestinfond, meanwhile, improved slightly after Parames left,

showing a gain of 1.2% between end-Sept. and end-December, against a full year performance

of 0.7%, the data showed.
While Bestinver has hired a number of new staff, including Beltran de la Lastra from

JPMorgan Asset Management as chief investment officer, and Ricardo Cañete from Mutuactivos

as head of Iberian equities, Morningstar said it remained cautious.
“Our overall view is that the firm has gone through material turmoil and there are

significant changes to its culture and investment team. We still have to see to what

extent the investment process might change too,” de Cenzano said.
The spokeman for Parames said his exit carried with it a two-year non-compete clause which

he was currently hoping to have overturned in exchange for around €30mn, to allow him to

set up a new venture, possibly in London.
Bestinver, however, had yet to respond to the offer, the source added.