Inarcassa, the pension fund for self-employed engineers and architects in Italy, has reviewed its strategic asset allocation for 2024, downsizing global equities and increasing higher rated corporate and government bonds to its portfolio.

The scheme announced in a statement last week that it is also targeting a higher allocation to real assets in Italy, increasing the correlation with the country’s economic growth and infrastructure.

The new asset allocation foresees 40.3% of the scheme’s assets invested in bonds, 21% in equities, 16.2% in real assets, 19% in real estate, and 3.5% in cash, it said.

The asset allocation review has led to excluding liquid alternatives, which made up 1.4% of total assets in September, rebalancing the portfolio in favour of illiquid asset classes, Inarcassa said.

The pension fund has decided to re-examine its investment strategy because of evolved market conditions, and the results of an asset and liability management (ALM) analysis, it explained.

Inarcassa’s assets under management (AUM) totalled €13.14bn at the end of September, including 35.5% invested in fixed income, 22.6% in equities, 18.1% in absolute return and real assets, 19.4% in real estate, and 4.6% in cash.

Within fixed income, the scheme invests 20.1% in government bonds, 8.1% in European corporate bonds, 3.7% in global corporate bonds, and 3.5% in corporate high-yield bonds, according to the pension fund’s September figures.

Absolute return investments also include private equity, amounting to 5.6% of total investments, and private debt (2.3%), while infrastructure projects fall under real assets and amounted to 2.1% of total assets invested in September, according to the scheme.

AUM down, government bonds up

Assets under management for first pillar pension schemes – Casse di Previdenza – declined year-on-year in 2022 to €103.76bn, from €107.9bn in 2021, according to the latest report published by the pension regulator Covip.

Assets have increased by 6.7% per year on average since 2011 for the five biggest scheme – Enpam, Cassa Forense, Cassa Dottori Commercialisti, Enasarco and Inarcassa. Cassa Forense’s assets recorded a peak increase of 10% in the last decade, while for the others the increase was on average 3.5%, the regulator added.

The share of government bonds in the portfolios of Casse di Previdenza has increased year-on-year in 2022 to 14.9%, totalling €15.43bn, from €14.74bn in 2021, the report added.

Casse di Previdenza invests the largest share of assets, amounting to €55.2bn and equalling 53.3% of the total, in Undertakings for the Collective Investment in Transferable Securities (UCITS), €30.2bn in Undertakings for Collective Investment (UCIs), €20.3bn in debt securities, €15.4bn in government bonds, and €7.8bn in equities.

Real estate investments amounted to €18.5bn last year, down from €19.8bn in 2021, and allocations to the Italian real economy to €36.9bn, or 35.6% of the total, up by 1.3 percentage points year-on-year in 2022, according to Covip.

Casse di previdenza supported Italian companies with €5.6bn investments last year.

“We can see how pension funds for professionals (Casse di Previdenza) are more inclined to invest in support of the country’s economy,” said Alberto Oliveti, president of Adepp, the Italian association of private pension funds.

Italian first-pillar pension schemes received €3.9bn in contributions last year, returning to values seen before the outbreak of the COVID-19 pandemic, Covip noted.

The latest digital edition of IPE’s magazine is now available