ITALY - The new Italian pension fund market has become a hotbed for fierce competition despite the low level of fees in the market.
In the three years since the first fund, Fonchim for workers in the chemical industries, started collecting assets only eight funds have reached the stage where they are investing and the pace at which new funds are being launched is still slow.
A further seven have chosen their managers but still have not started investing assets. Another 10 are at different stages in the process of selection.
One of those approaching the appointment stage is Previmoda, the pension fund for workers in the fashion industry. It received 28 applications from a mixture of Italian and foreign firms. It has already eliminated six or seven of these because they did not have the basic requisites.
It expects to draw up a short list and then select two fixed income managers and one equity manager. But the fund does not foresee making the final selection for four or five months.
Another fund currently involved in the selection process is Fondo Previdenza Mario Negri for directors of transport, shipping and commercial industries. It is one of the funds that pre-dates the pension fund law whose rule most of the new funds are using.
The fund already has five managers running Italian equity, European equity, US equity, euro-denominated bonds and global bond portfolios. However the fund wants to select five more in case it wants to replace the existing managers or add another one as the assets under management grow.
A spokesperson for Mario Negri said that there were no plans to replace managers yet but poor performance and a change to the ownership or structure of the management company are the reasons that would prompt a substitution.
The latest fund to put out a request for management proposals is Mediafond, a fund for employees in the media company Mediaset which is owned by the Italian prime minister, Silvio Berlusconi, through his family holding company, Fininvest, and other private broadcasters. The fund was not available for comment on how many managers it is looking for but there are around 4,000 workers who could join the fund.
One of the management firms that could apply to manage Mediafond’s assets is Mediolanum State Street, a US/Italian joint venture. However Mediolanum is also part-owned by Fininvest and it remains to be seen if the Italian rules would allow such a mandate.
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