Italian mutual funds redemptions exceeded new investments for the first time since 1995.
In September, the whole industry suffered a net outflow of E1.662bn.
The main reason was the huge redemptions from bond funds amounting to E17.089bn, with only E9.649bn of inflows. Italian private investors shunned the most popular mutual funds following the sector’s disappointing performance. New investments in equity funds of E7.628bn did not offset the outflow.
In 1999 ‘medium-long term euro bond funds’ have underperformed by1-2%, surprising many private investors, who had been told bond funds would outperform Italian government bonds, without adding risks.
Bond funds in Italy are still the biggest sector in the industry, representing about 68% of the total assets of mutual funds. Banks succeeded in convincing their clients to switch from government funds to mutual funds. The average annual management commission is 0.7%, which means Italian money managers earned E2.274bn from January to September, according to estimates.
The banks most involved in this new trend are those which, during the last two years, have been more successful in selling bond funds: Istituto San Paolo di Torino, Cariplo, Unicredito, Banca Commerciale Italiana, Banca Nazionale del Lavoro, Monte dei Paschi di Siena, Banca di Roma, Banca Popolare di Milano, Popolare di Novara and other co-operative banks linked to Arca.
Now the big question is how long this negative trend will last.
Maria Teresa Cometto