Italian pension funds have relied on tactical asset allocation decisions in bonds and equities to sustain returns in the first eight months of the year.
Inarcassa, the €16.6bn first pillar pension fund for engineers and architects, extended dollar hedging in July, reduced its exposure to global equities while overweighting Italian stocks, and cut US equity allocations within its global equity portfolio, the fund said in a statement.
The extension of dollar hedging generated 2.6% in value, supporting positive returns so far this year. Adjustments in equity exposure led to a 55% outperformance against the benchmark in the first seven months (9.2% versus 5.9%), the fund added.
Inarcassa recorded gross operating profits of 3.88% in the first eight months, broadly in line with its 6.1% full-year return target.
In June, the board of directors approved new investments in global high-yield bonds and four new commitments in Italian private equity. The scheme is currently reviewing its strategic asset allocation, anticipating lower returns and higher volatility.
Fondo Gomma Plastica, the sector scheme for rubber and plastics employees, surpassed €2bn in assets under management in August, recording positive returns in the first half.
The sub-fund ‘Conservativo’ returned 1.50%, ‘Bilanciato’ 0.94%, and ‘Dinamico’ 2.29%. The ‘Conservativo’ option benefited from a higher exposure to European sovereign debt, and from the stability of the European bond market, said director Luca Ruggeri.
He added that the fund adopted a tactical position on the bond curve and increased exposure to US equities, which supported the performance of the ‘Bilanciato’ and ‘Dinamico’ sub-funds after earlier setbacks from volatility and a more than 12% depreciation of the US dollar.
The sub-funds for Solidarietà Veneto, the €2.5bn regional pension fund for Veneto workers, also posted positive results year-to-date, supported by a strengthening US dollar, an equity rebound, and alternative investments.
The ‘Dinamico’ option returned 2.79%, driven primarily by gains in developed and emerging market equities, while the ‘Reddito’ sub-fund delivered 1.54% on the back of Italian SME and infrastructure investments, the fund said.
The ‘Prudente’ sub-fund returned 1.35%, with its new manager Amundi – which replaced Unipol – outperforming its benchmark.
The ‘Garantito’ option, managed by Anima and largely invested in fixed income, returned 1.14% so far this year, benefitting from lower exposure to US government bonds, the fund added.
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