Italian occupational pension fund Laborfonds has begun a comprehensive review of its strategic asset allocation that will culminate with a new asset manager selection for its Bilanciata (balanced) and Dinamica (dynamic) investment lines, worth €1.5bn in total.
The €1.8bn fund, which also offers a Garantita (guaranteed) and a Prudente-etica (ethical) line, is aimed at employees working in the northern Trentino-South Tyrol region of Italy.
Five years ago, Laborfonds introduced a new investment model consisting of a 60-40 split between passive and active management, respectively, with overlay of the active manager on the passive portion.
Managing director Giorgio Valzolgher said the fund was now reviewing the results of this approach and that, based on the analysis, the model might be adjusted or changed altogether.
“We won’t necessarily change the strategy,” he said, “but we are making all the assessments needed to see how the portfolio has responded and whether the objectives have been reached.”
The review process, conducted with the support of Tower Watson, will be concluded as the mandates for the balanced and dynamic lines come to an end, roughly a year from now.
Eurizon has managed the passive portfolio while Blackrock took up the active one.
Credit Suisse and Pioneer manage the two other investment lines.
Valzolgher pointed out that an important part of the strategy was reducing the number of managers.
“Before we adopted the new strategy, we had six managers for the main investment lines, all of which were specialist and active,” he said.
“Our experience made us reflect upon the number of managers. We went against the trend by switching from six to two. We found that while all managers call themselves ‘active’, sometimes there is little active in their approach.
“As a pension fund, we have certain objectives, so it is important to develop the capacity to protect the portfolio from negative market trends.”
He said the fund had looked extensively at alternative asset classes, including commodities, but that the current regulation prevented them from expanding into these areas.
The regulation on investment limits for pension funds, included in the 703 law, is due to be changed soon, pending final approval from the Italian parliament, which is expected by this summer.
Meanwhile, Laborfonds is working on solutions to invest in the local economy.
In partnership with the Trentino-South Tyrol region, Laborfonds has set up a strategic closed fund named Fondo Strategico, worth €125m, which will lend money to local public or private companies, including SMEs, through minibonds and other fixed income products.
The Trento and Bolzano provinces are pouring €150m in the fund as a guarantee for investors fronting the €125m budget.
Valzolgher said the Fondo Strategico aimed to increase the general risk profile, and the participation of the two provinces was aimed at mitigating that, making the investment more attractive