Italian industry-wide pension funds – fondi pensione negoziali – plan to continue to increase their exposure to alternative investment funds (AIFs) in the future.

According to a report by think tank Itinerari Previdenziali, 73% of the fondi negoziali intend to increase investments in alternative funds from 58% currently investing in AIFs, while 15% stated the intention to allocate capital to real estate AIFs, from the current 7.7%.

The results of the survey underpin recent developments that have seen five Italian industry-wide pension funds, including Foncer, Fondo Gamma Plastica, Fopen, Fondo Pensione Complementare Pegaso and Previmoda committing €168m to invest in infrastructure through a project called Vesta.

The pension funds have started a tender to pick an Alternative Investment Fund Manager (AIFM) for the selection of AIFs to invest in infrastructure.

Four industry-wide pension funds had previously picked StepStone Group to invest in private debt through an AIF strategy, and five pension funds launched the consortium Iride to invest in private equity.

The share of industry-wide pension funds applying ESG standards to investments in private equity and private debt has grown to 12% in 2022 for both asset classes, from 5% applying ESG criteria to investments in private debt and 0% to investments in private equity in 2021.

The survey’s report disclosed that 58% of pension funds adopt a social responsible investment (SRI) policy, up 5 percentage points year-on-year in 2022, while 82% of the pension funds without a SRI policy today has declared the intention to implement one in the near future.

The survey also showed that 18% of the respondents is not planning to adopt a sustainable investment policy and that 60% of pension funds adopt an SRI policy for more than five years with 66% of them applying a policy to a percentage of assets between 75% and 100%, up from 45% last year.

The pension funds mainly choose exclusion strategies (42%), and adhere to international conventions (23%), when adopting SRI policies, while impact investments have increased by 4% year-on-year in 2022.

Investing with an eye on ESG diversifies risk, 38% of industry-wide pension funds said, but only 8% is recording better returns.

The vast majority (88%) of the industry-wide pension funds is investing through mandates this year, up from 79% last year. Only 35% of the survey respondents will continue to invest through mandates in the future.

The report has also revealed that all first-pillar funds (Casse di Previdenza) taking part in the survey currently invest directly in alternative investment funds, 95% in traditional mutual funds and 90% in real estate AIFs.

In the near future, the Casse di Previdenza will continue to make direct investments in AIFs (90%) and investments in mutual funds (74%), while investment in real estate AIFs are set to drop to 37%.

Additionally, 53% of first-pillar funds will conduct a review of their asset allocation in the short-term, planning also to increase exposure to ETFs (42%), the report disclosed.

The majority of the Casse di Previdenza (63%) has not yet adopted a sustainable investment policy. Only 37% invest sustainably, according to the survey.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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