Italian pension funds with a higher exposure to equities have recorded on average best results last year, according to pension regulator COVIP.

Returns for schemes with higher equity allocations averaged 10% for industry-wide pension funds (fondi negoziali), 11.3% for open funds and 11.4% for individual pension plans (PIPs), the regulator said.

The ‘Linea Dinamica’ sub-fund of scheme Laborfords, the pension fund for the Trentino-Alto Adige/Südtirol region, which has a higher equity allocation, recorded the best return among the sub-funds with 9.33% last year, while the ‘Garantito’ sub-funds returned 4.01%.

The mixed bond and equity sub-fund, aldo known as ‘Linea Bilanciata’ returned 6.57%, and the ‘Linea Prudente Etica’, investing also in alternatives, returned 7.47%, the scheme said.

Laborfonds’ assets under management increased by €400m year-on-year in 2023 to €3.8bn, it said.

Fondaereo, the pension fund for pilots and flight attendants, said in a note that 2023 was “an excellent year” in terms of returns, and number of members.

The equity sub-fund ’Crescita’ recorded a 10.66% return, while its mixed bond and equity sub-fund ‘Bilanciato’ returned 8.08%, and the ‘Garantito’ 3.80%. The scheme’s assets under management increased by approximately €30m (7.54%) year-on-year in 2023, and exceeded €415m, it added in the note.

The pension scheme has, meanwhile, reorganised its investment sub-funds, reducing them from four to three, but starting at the same time new investment options from 1 December.

For Fopen – the Italian pension fund for the employees of energy company Enel – its equity sub-fund ‘Bilanciato Azionario’ returned 11.62%, while its ‘Bilanciato Obbligazionario’ returned 8.35%, and the ‘Obbliagazionatio Garantito’ 3.72%, it said.

Last year’s returns were the results of an equity market that performed well overall, and also of a bond market that shone mostly in the last three months with an unexpected strength to break previous record of consecutive daily rises, the scheme said.

As a result, assets under management progressed by 12% year-on-year in 2023 to reach €2.79bn, with 6% of total asset now invested in private markets, it added.

The pension schemes for journalists, INPGI, returned 7.23% last year, 41% over the past 15 years.

According to COVIP; in the last 10 years – from the beginning of 2014 to the end of 2023 – the average annual compound returns of sub-funds with higher equity exposures stood at around 4-4.5% for all types of pension funds, clearly above average returns in the range of 2-3% for mixed bond and equity ’Bilanciato’ sub-funds and close to zero returns for ‘Garantito’ sub-funds.

Increasing guarantees, assets and members

Pension funds such as Solidarietà Veneto and Cometa are increasing guarantees in their ‘Garantito’ sub-funds, looking to invest more in bonds with higher interest rates.

Positive returns mean that assets under management jumped by 8.2% to €222.6bn at the end of last year, compared to €205.6bn at the end of 2022.

Net assets for industry-wide pension funds have increased by 11.1% to €67.9bn, according to COVIP, by 16.3% for open funds to €32.6bn, and by 9.8% for PIPs to €49.9bn.

The number of members increased by 4% to 10.7 million last year, including those with multiple memberships, with the highest increase recorded by open funds (5.9%) and in industry wide pension schemes (5.5), now counting over 4 million members, according to COVIP.

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