FUND BOUTIQUES, FAMILY OFFICES & VALUE INVESTING: Ownership Approach, Business Schools, Behavioural Finance & more (Interview – Christian Freischütz)

Fund boutiques have been meeting with increased interest for years, not only in Germany. In the value investing segment, there are a number of service providers offering training courses, events and webinars. Markus Hill spoke for FONDSBOUTIQUEN.DE with Christian Freischütz from the Value School in Madrid, Spain. In addition to topics such as value investing, family office and investment culture in Spain, topics such as setting up a consulting firm in the pension fund segment, the selection of fund boutiques and skin-in-the-game factors were also addressed.

Hill: What does the Spanish market for fund boutiques look like? What role do family offices play here?

Freischütz: The Spanish market has been characterized for long time to be a bancarized (I include insurance companies for this purpose as most did bancassurance deals with banks to gain distribution size) asset management sector, with bank branches nearly everywhere (second largest bank branches density per thousand inhabitants of the world just before the GFC). It was very profitable for banks to have lowly paid asset managers which were basically index tracking. The GFC changed little, but as bank branches started disappearing and the banks were involved in quite a number of scandals, life got easier for independent asset managers. A few Family Offices started managing their money independently from the banks at the end of the ‘90s and beginning of the 2000s, between them the Entrecanales (a family with interest in the construction sector back then, nowadays owners of Acciona) Family Office called Bestinver. They hired Francisco García Paramés in 1989 and 2 years later he was running the Spanish equity fund with a Value Investing approach and achieved a very good track record (15.7% p.a. Jan 93-Sep 2014), he gained larger attention from Spanish media as during the Internet Bubble meltdown (Bubble during which he refused to purchase the trendy stocks, he made a strong performance vs a falling market). Other Family related managers (also around that time where Lierde Sicav and La Muza Sicav, related to Mr Alierta and to the Urquijo family) and a few other independent players like Metagestión were created back then. Between the Internet Bubble and the GFC more independent projects were born: Cartesio Inversiones, Belgravia Capital, Solventis Gestión, Abaco Capital… but the larger boom in terms of number of independent projects came after the GFC as performance of the banking asset managers was very poor. Since then we have seen quite a number of new projects like Trea AM, Valentum AM, Invexcel, Equam Capital, Buy&Hold, Lift Investment Advisors… One factor which has made the sector much more dynamic has been the departure of Mr. Paramés and a few other partners / managers from Bestinver in September 2014. Since then a number of projects started from “scratch“ and gave the ecosystem much more depth. End 2015 AZ Valor and Magallanes Value Investors were founded and  in 2016 Cobas AM (Paramés) entered the arena too. 

Christian Freischütz,
Director Business Development at Value School
Christian Freischütz,
Director Business Development at Value School

Hill: The family office segment and fund boutiques seem to be closely related in Spain. What is the relationship with Value School? What exactly do you do there, what is your mission?

Freischütz: During his non-compete period, Mr. Paramés re-read the classic investor books, between them Peter Lynch, who got a 29% p.a. performance over 13 years in a row. In his book he stated that NONE of the investors in his fund made this performance as people traded the fund. This was a revelation, if Mr. Paramés was able to compound at 15% p.a. over the following two or three decades, his investors should be able to get the same returns. Thus, people in Spain needed to learn about financial education: that was the basic idea behind Value School. In 2017 Value School was founded and started offering mainly online information and education programmes, investing books were also translated into Spanish to give more options to people. In 2019 we have found a few potential partners to replicate the Value School model in Italy (Value School Italia) and perhaps in Germany with the founders of Value Campus. Other projects  I find interesting are Value Dach and Vadevalor which has also an event together with RankiaPro. Apart from starting quite a good number of online courses to educate people with little or no financial knowledge we (Value School together with me) have also been able to attract in September 2018 Mr George Athanassakos to teach his Value Investing Program in Madrid and have now partnered with the Gabelli School of Business to bring online to Spain a Behavioural Investment Course for end of May 2020! (

Hill: What would you like to see for the fund boutique segment in Spain? What is your experience with the conference segment in other European countries?

Freischütz: One of my dreams is to see a much larger independent asset management sector in Spain. Currently around 7% of AuM are run by independent managers and another 4% would be foreign firms of which some will be independent and some not. The long term aim is that the fund offering in Spain ends up being as diverse as it is e.g. in the UK (70% of money is run by independent managers). In that sense this is how I ended up collaborating with Value School. Our aims are pretty complementary. Since 2015 my wife and me are running the Spanish value investing conference called Value Spain which follows the spirit of the Italian Value Investing Seminar. Other conferences we are supporting as friends are: the Nordic Value Conference in Copenhaguen, Smart Vienna,  the International Value Investing Conference in Luxembourg and the Prague Czech Value Conference. We have attended all European and some US conferences as the: London Value Investor Conference, Value X in Klosters and the Cyprus Value Investor Conference. In Germany we have also been at Mr Stefan Rehder´s VIA Conference and in North America we have attended twice the Berkshire Hathaway Annual Shareholder Meeting (the Cradle of Capitalism as Mr. Buffett puts it) plus the conferences which have grown around it (Gurufocus conference and the University of Omaha Value Investing Conference). Additionally I also attended the Ben Graham Value Investing Conference in Toronto which is done just before Prem Watsa´s Fairfax Annual Shareholder Meeting.            

Hill:  You have quite a good experience with events, courses etc, can you tell us which event in the value area impressed you the most, which one did you experience intensively? 

Freischütz: For any Value Investor the Omaha events are a must, at least once in life, especially now  while Warren Buffett and Charlie Munger are around. All conferences I have attended have their own distinctive features, some are more marketing oriented while others  are more inclined to be “secret friends gatherings”, all of them are worth to be visited at least once. The features around the event might help you to decide in which order to test them: if you like skiing, Guy Spier’s Value X is for you but it is not easy to enter the group; if one loves to explore southern Italy (Bari area), then check Ciccio Azzollini´s conference; if you like the magic of the nordic countries, Copenhaguen, in July you have to ask Ole Soeberg and his a phantastic setting; fancy a late holiday to enter winter with a nice the suntan then Sophocles Sophocleus & Cyprus end of September are your option; a city of art like Vienna is a must with Reinhard Krakauer and obviously Spanish food-art-charm are to be found in Madrid with us; as said, all have their specific interest. 

Hill: Apart from your support to Value School, what are you currently working on more intensively?

Freischütz: I have set up a small advisory firm to advise a pension fund in Spain, it is just about to be launched. The Spanish pension funds have had basically no evolution in the past two decades, in the last 15 years over half of all of the funds did underperform the inflation (in number of funds if we weight them for AuM, it would be much nearer to  two thirds).  The only innovation has been the entry of index funds a few years ago, apart from that banks still sell pension funds offering presents (20 years ago it was towels and tv sets, now it´s iphones and tablets, but basically it is the same idea, bring your money to the bank, we will most surely underperform inflation until you retire and we will get hefty fees from you). Thus I will set up a fund of funds (between 7-12 funds) which invests in smaller boutique asset managers in Spain which have an entrepreneurial spirit and certainly skin in the game. Although the final composition is not known yet, we are looking into some of the most promising smaller boutiques like (alphabetically): Abaco Capital´s Global Opportunity fund, Buy&Hold´s Equity fund, Equam´s Incometric fund, Gesiuris Japan Deep Value fund, La Muza´s Sicav, Lift Investment Advisors fund, Palm Harbor Capital equity fund, Phoenix Asset Management Partners Aurora Investment Trust, Singular Banks Value Strategy Fund and Trea Asset Management European equity fund. All of them have owner operators (and invest mostly in owner operators) with skin in the game , have long term approaches, a solid investment process and extense investing experience (in some cases over 2 decades). 

Hill: Thank you very much for your time.

Christian Freischütz
Director Business Development at Value School
T: +34.630942684

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