According to the report for 1999, Fonchim fund managers have not invested in mutual funds, but have invested directly in bonds and equities. No recent reports are available for the ‘old’ Italian pension funds, which were already operating before the current rules.
“We are still collecting data about 1997 investments because annual reports are approved and publicised very late,” Sergio Corbello, chairman of Assoprevidenza (the Italian pension funds’ industry body), says.
The old funds are free to invest directly in mutual funds, while ‘new funds’ can invest up to 20% of their assets directly only in closed-end funds (venture capital) and real estate investment trusts. So far none have.
“Mutual funds could become a very important investment tool for fund managers of the new closed-end pension funds, because they manage small portfolios and they have to diversify them globally,” Corbello claims. In fact the biggest one, Fonchim, has only E250m euros in assets, so each of its six fund managers invests only about E40m.
The managers of the new open-end funds can also invest in mutual funds. Because they are promoted and managed by insurance companies, banks and investment companies, they can invest in the products of the same group. But, under no circumstances can management fees be duplicated.
“In the case of open-end pension funds, the total cost of management fees illustrated in the ‘Prospetto informativo’ (containing the information available to the retail public) must be included”, Daniele Pace, member of Covip (the Italian supervisor of pension funds) warns. “We do not encourage fund managers of pension funds to become just collectors of others’ mandates – we ask them to closely verify the investment strategy and style of all the mutual funds’ managers they chose”. Maria Teresa Cometto