Fondo Byblos, the €1bn Italian second-pillar pension fund for the paper, publishing and media sectors, has adopted a new strategic asset allocation that reduces its equity exposure in favour of fixed income and, over time, private markets.
The changes took effect on 1 July and focus primarily on the fund’s largest sub-fund, ‘Bilanciato’, which holds €760m in assets. Equity exposure in the ‘Bilanciato’ sub-fund has been trimmed from 35% to 30% as part of a broader repositioning.
The pension fund cited a shift away from equities that are unlikely to replicate the “exceptional returns” seen in recent years, and signalled plans to increase allocations to alternatives to around 10% of total assets in the ‘Bilanciato’ portfolio, according to an investment policy document.
As part of the revised strategy, Byblos has adjusted benchmarks for both its ‘Bilanciato’ and ‘Dinamico’ sub-funds – the latter holding €70m – to reduce concentration in US equities.
The changes include the introduction of a global developed markets small-cap equity index and the MSCI Euro index, which now account for 15% of the equity portfolio.
The cut in equities is being offset by a higher allocation to euro zone government bonds with maturities of one to three years. In ‘Bilanciato’, the allocation rises from 10% to 20%, and in ‘Dinamico’ from 10% to 15%.
Under the new target allocation, the ‘Bilanciato’ sub-fund will invest 19.5% in global developed market equities, 4.5% in European developed market equities, 3% in small caps, and 3% in emerging market equities. Fixed income allocations include 20% in euro zone government bonds, 45% in global investment grade bonds (euro-hedged), and 5% in global high-yield bonds (euro-hedged).
‘Dinamico’s’ asset mix comprises 28% in hedged global developed market equities, 9% in European developed market equities, 6% in small caps, 6% in emerging market equities, 15% in euro zone government bonds, 25% in global investment grade bonds (euro-hedged), and 11% in unhedged developed market equities.
To implement the strategy, Byblos has appointed AXA Investment Managers, Groupama, Allianz Global Investors and Payden & Rygel to manage the ‘Bilanciato’ sub-fund, while Eurizon Capital will manage the ‘Dinamico’ portfolio.
Proceeds from reductions in equities and bonds will be directed towards private markets. Byblos plans to invest 15% of its assets in private debt, private equity and real assets – including real estate and infrastructure – through a mandate with Neuberger Berman’s multi-asset alternative investment funds (AIFs).
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