Italian pension funds are facing pressure to increase investments in private markets and support the domestic economy.
Earlier this month, speaking at the international economic event Forum Ambrosetti, finance minister Giancarlo Giorgetti questioned why Italian pension funds invest everywhere except in Italy.
“Are there no investment opportunities in Italy for patient [investors] seeking appropriate returns?” he asked.
Giorgetti also said Canadian pension funds invest in Italian companies while Italian pension funds do not.
In its annual report on Italian institutional investors, think tank Itinerari Previdenziali said the low share of investments in the Italian economy by industry-wide pension funds, known as Fondi Negoziali, “remains a cause for concern”.
According to the report, just 3.90% of the €81.52bn in assets under management of Fondi Negoziali is invested in the real economy, excluding Italian government bonds.
Including government bonds, the share of investments in the domestic economy rises to 13.80%, the report said.
Industry-wide pension funds hold significant volumes of government bonds, while their allocation to equities exceeds Italy’s share of global GDP despite the limitations of the domestic stock market, Luca Ruggeri, general director of pension fund Fondo Gomma Plastica, told IPE.
Fondo Gomma Plastica is investing in listed Italian small- and mid-cap companies through a consortium with three other pension schemes.
Ruggeri said industry-wide pension funds could further support the Italian economy through private market investments.
“This area offers attractive opportunities, particularly in private equity, especially given the evolution of domestic financial intermediaries, which have grown in both size and professional expertise; naturally, this requires the pension funds to demonstrate a high level of professional rigor in fund selection and risk monitoring,” he added.
Giovanni Maggi, president of pension fund association Assofondipensione, told IPE that increasing investments to support the national economy “is in the DNA of pension funds”.
Pension funds invest “significant amounts” of assets in Italian government bonds, while in private markets is true that the share of domestic investments remains low, Maggi added.
Assofondipensione expects domestic investments to increase in the coming years as membership grows following the introduction of auto-enrolment.
According to pension regulator Covip, membership of Fondi Negoziali increased by 6.9% in the first half of the year to 4.82 million.
However, Maggi said many pension funds are currently pausing private-market investments, “extremely concerned about the issue of portability” of employer contributions, which could affect membership and asset growth.
