PrevAer, the Italian defined contribution (DC) pension fund for employees in the air transport industry, has shifted to a new full multi-asset strategy for three of its sub-funds, expanding investments in alternatives, and handing over the mandate to Eurizon to manage Alternative Investment Funds (AIFs).
The scheme has opted for the new strategy for liquid and illiquid investments held in its sub-funds – ‘Prudente’, ‘Crescita’ and ‘Dinamica’ – with assets totalling €620m at the end of 2023, to streamline investment operations.
The scheme also holds a fourth sub-fund, ‘Garantita’, worth €84.92m as of the end of 2023.
The new strategy means that investments in illiquid asset classes are more efficient, conducted through a “simplified administrative” structure to pick AIFs, and that facilitates the management of recalls, distributions and accounting during the investment phase, the scheme said in a statement.
The scheme also believes that going forward the management of liquidity flows coming from liquid and illiquid investments will become more efficient, optimising capital calls processes, and aligning divestments, it added.
PrevAer does not consider liquidity as a standalone asset class, but it has set a limit of 30% of assets to hold as liquidity in its portfolio. The Garantita sub-fund, investing in bonds, can hold up to 100% of assets as liquidity.
The multi-asset strategy will help streamline investment operations when selecting AIFs, and reinvest capital without the pension fund conducting due diligence, it added.
PrevAer’s managing director Marco Barlafante said in a LinkedIn post that the multi-asset strategy is an “innovative solution that will stabilise the portfolios and strengthen the partnership” with Eurizion.
So far, PrevAer has directly invested in private markets, pursuing a strategy to support the domestic economy. Directly investing in private markets through AIFs has, however, exposed the pension fund to liquidity risks contained by limiting the exposure to those asset classes to below 10% of total assets held in the three sub-funds.
With the new multi-asset strategy, Prevaer has increased allocations to private markets up to 10% of total assets in ‘Prudente’, up to 15% in ‘Crescita’, and up to 15% in ‘Dinamica’.
Eurizon will also allocate assets in evergreen AIFs to re-invest dividends, according to the latest version of the scheme’s investment policy effective from 16 January.
The scheme has recorded a 7% return on average annually with private markets investments, it added. It expects 2.90% returns from assets invested in ‘Garantita’, 3.08% in ‘Prudente’, 3.97% in ‘Crescita’, and 4.70% in ‘Dinamica’, according to its investment policy document.
The three sub-funds also invest in euro government bonds and world equities, according to the scheme.
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