ITALY - The first wave of Italy's new pension funds have agreed management fees of as little as six basis points on fixed income mandates and 15 basis points on equity portfolios.
Although the charges may have risen slightly since then, they are still well below those in more developed markets such as the UK.
As a result the fund managers are not expecting to make any money out of their first mandates but feel having a track record in Italy will stand them in good stead once the market takes off.
Competition among managers, both domestic and international, looking to manage new private pension funds in Italy is expected to remain high for some time. In part this is because of the slow pace at which the funds are being set up.
There are few mandates up for grabs and limited amounts of assets to be invested. But it is also as a result of the success of Italian management companies in getting the majority of the first mandates which have set the level at which the service is charged.
“The size of the management fee is not the most important consideration in our selection process,” said the director of one of the first Italian funds to appoint managers. “We want to see a solid company and good track record before we consider the costs. But it does seem that foreign banks are cutting their fees to compete with the Italians.”
In the three years since the first fund, Fonchim for workers in the chemical industry, started collecting assets only eight funds have reached the stage where they are investing.
In this week's Pensions Buzz survey, we want to know whether or not you agree with Lord Myners' opinion that asset owners, such as pension funds, are substantially to blame for short-termism in business.
The combined funding level decreased by just over four percentage points by the end of last month to 93.6%, according to the Pension Protection Fund's (PPF) latest update.
Plastics manufacturer Carclo has missed yet another dividend as it continues to battle its defined benefit (DB) pension funding shortfall.