The Italian lawyers’ fund Cassa Forense has 30% of its investment portfolio invested in equity funds and corporate bonds exposed to volatile markets, it said in a statement that is its first analysis of the impact of the war in Ukraine on its assets.

Cassa Forense has placed its assets, which in total were worth over €15bn at the beginning of the year, in a strategically “defensive” position, combining liquidity and short-term bonds, with funds investing in precious metals and “high-quality equity investments”, trying to shield the portfolio from volatility, it said.

It has decided to cut the most volatile share of equities in its portfolio during the summer of last year and it has increased in recent months its position on “short duration” bonds that are less affected by the rise in interest rates, it added.

The pension fund has therefore taken steps towards a prudent strategy in portfolio management going beyond tactical options and the “emotional wave” resulting from the war in Ukraine, it said, adding that its investments position was set through a series of decisions taken over the months prior to the conflict.

Cassa Forense was also among the Italian pension funds increasing its investment stake in Banca d´Italia in search of stable returns, taking advantage of the budget law for 2022 allowing it to up the threshold for investments in the bank from 3% to 5%.

The pension fund had already invested €225m in Bank of Italy in 2015. Over the years, the investment has guaranteed a constant return of 4.5%, for a total amount of €70m in dividends. The portfolio recorded overall a 6.3% performance in 2021.

The scheme now has 40% of its assets allocated to what it considers stable investments which are not strongly affected by market fluctuations, while 15% is invested in real estate, including the Cicerone fund set up by Fabbrica Immobiliare for pan-European investments, and whose valuation is not affected by short-term market volatility.

The same applies to a 15% allocation to infrastructure and private market funds, it said.

Cassa Forense expects mark to market losses to be limited with a resilient portfolio invested in funds actively managed, a cautious strategy, diversification, and liquidity necessary to seize possible but still unclear investment opportunities.

The scheme is reviewing its asset allocations in line with the new macro-economic scenario, it said, adding that equity markets are facing a “strong phase of turbulence” as a direct consequence of the war in Ukraine.

It expects a significant impact on the European economic cycle, trimmed estimates on real economic growth and rising duration of expected inflation.

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