Cristobal Lopez
Tell us about your role and your team.
I’m responsible for MetLife’s unit-linked investment offering in the Gulf region and the Levant. Our investment offering is divided into three risk profiles: Conservative, balanced, and aggressive and mainly focuses on third-party mutual funds across equities, bonds, money markets and multi-asset. The team’s role includes the development of a suitable investment offering, onboarding/offboarding of funds, selection of new managers and monitoring process. On top of this, we provide support to other lines of business including training on distribution channels, monitoring operations, marketing campaigns etc.
How many fund houses do you work with and how many funds are on your product shelf? What new strategies have you selected this year?
We work with 30 fund houses, most of which are large international institutions. However, our investment offering that is open to new clients has a smaller number of funds. We decided to narrow our investment universe and focus only on those funds that we believe offer a better value proposition to our customers. Our current investment offering includes 16 asset managers only.
What gaps are you looking to close in 2023? Are any of your products at risk of being removed? If so, in which area?
For the most part, we believe our investment offering is well balanced and offers a good selection of managers across the asset classes and sectors we consider suitable for our customer base. Having said that, we have been working on enhancing our ESG offering and will continue to do so during next year. In addition to ESG, we are also looking at a couple of well-diversified thematic ideas with long and sustainable trends.
Which sectors have been most popular with your clients this year?
We have seen increased demand from our customers in multi-asset funds, predominantly through moderate and conservative risk profiles. Unfortunately, this year multi-asset funds have not been able to deliver the expected protection and diversification benefits they usually provide, as both equities and fixed income assets have performed poorly. Historically, fixed income has been a safe investment for investors looking to limit the risk of equity markets, however, 2022 could become one of the worst years on record for fixed income assets.
While we do not offer any investment advice, we continue to believe multi-asset funds are among the most cost-effective investments for long-term investors that are looking for stability and a smoother return profile.
Both, the energy, and sustainable energy sectors have also been very popular. Energy is the only MSCI World sector that has achieved positive returns year to date, whilst sustainable energy continues to offer an attractive long-term opportunity as the world transitions away from fossil fuels.
Are Shariah-compliant funds meeting your expectations and what can asset managers do to meet the demand for Shariah-compliant products?
We do offer Shariah-compliant funds for customers who want this option; however, we are not a Takaful or a Shariah-compliant provider. Our Shariah-compliant investment offering is small, and we do not have a huge demand from our clients. One of the main observations with Shariah-compliant funds is that the universe remains fairly limited, and the funds tend to have low AUMs which is usually a risk we don’t like our customers to take.
Sum up your investment philosophy in a few words.
We don’t have an investment philosophy per se, as we do not build portfolios for our clients nor provide advice. Our investment proposition is based on an open architecture approach that our customers choose. However, we do put a lot of emphasis on avoiding unintended risks for customers, therefore, in general, we like funds with long and proven track records, larger-than-average AUMs and solid risk management capabilities. We also have a preference for large international asset managers with good distribution capabilities in the region. We prefer to stay away from flavour-of-the-month investments and focus on funds with good long-term performance.
From your perspective what are the most important traits in a manager?
I believe there is no one-size-fits-all formula when looking at specific traits from managers. Every manager is different, but I would say two things that I do like about managers. First is experience. The older I get, the more I believe that having gone through different market environments is very important. Second, look for managers that do what they say they do. It sounds obvious but is not. For example, value managers have found it very difficult to stick to their philosophy and cope with the pressure from underperforming growth managers over the past decade. As a fund selector, you want to understand when a fund outperforms or underperforms. If a manager is outperforming when you think it shouldn’t, you either don’t have a good understanding of the fund’s philosophy or the manager is not sticking to their process.
What is your biggest concern in the current market situation?
One of the main concerns is if the Fed and other central banks are not able to control inflation and create a global recession through aggressive monetary tightening. An even bigger issue is the potential impact on the sustainability of global debt levels, particularly sovereign debt. The global financial crisis of 2008 should have taught us the dangers of excess debt. However, over the past decade, global debt levels have continued to rise, fuelled by low interest rates and more recently due to Covid. We have seen a substantial increase in the number of advanced economies with debt ratios larger than the size of their economies, and the increase in the borrowing cost could have severe consequences for countries with financial vulnerabilities.
What is a hobby you have picked up recently or would you like to get into?
I love running in the mountains, particularly over long distances. Ultra-running is any distance above a marathon and usually on remote trails. I have always been a bit of an endurance freak but over the past couple of years, I have been loving trail running.
Who are you supporting at the World Cup?
Spain.