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Funds are increasingly popular among Italians

23 June, Il Sole 24 Ore

Italians are back to saving. At the end of 2017, the subscribers of trust funds were 7.2 million, over 500 thousand more than the previous year. 12% of the Italians are investors. Half of the money-savers have holdings in funds for over 14,400 euro. The profile emerging from the recent survey by Assogestioni is rather interesting: the gap between men and women has considerably reduced, the average investor lives in northern Italy and invests 31,200 euro on average.

Long gone are the days when Government bonds offered double digits returns. Since the diminished liquidity of the real estate market nowadays, investors are increasingly looking at asset management. As finding “safe” investments on the market is not easy, more and more people are assisted now by a consultant to diversify and reduce the risk.

People who invested in funds (for instance, Italian equity funds) last year obtained averaged returns for 21.15%, while Piazza Affari grew only by 21.15%. If we consider the last ten years (hence, including the recession years), the funds in Italy resisted better the crisis: they gave 16.1% returns against the 12.65% of the stock market. The performance in the first part of the year, however, is less brilliant: funds have grown by 1.33%, against the 3.13% of the stock exchange.

As stressed by Assogestioni, PIR provided a great impulse to investments. PIR are individual saving plans that allow savers to have a tax relief on the capital gain at the end of the five-year duration. Last year, PIR provided excellent results to investors. The Ftse Italia Pir Pmi All index grew by 34% in 2017, even though its yield has been 0 since the start of 2018. The investments in PIR are continuing to grow nonetheless. According to the number of Assogestioni, the Italians investing in PIR compliant national funds are more than 690 thousand, about 800 thousand if including international funds. Half of the investors are at their first time with collective asset management instruments. The numbers exceed the expectations of the Government as well as of the market, confirming the success of such products.  PIR have indeed awakened the interest of Italian towards investing, but this is not enough to protect investors from risk completely. Funds have risks too, along with costs (very high in some cases), and they not always meet the expected returns. The industry has to make a preliminary effort. Financial education is needed. For this purpose, Mario Nava, Consob president, comments: “There is still a lot to do. 40% of the Italians are not able to assess their financial knowledge, 50% are not comfortable dealing with financial matters, and another 50% are simply not interested”. Moreover, most Italians “does not have a financial plan, nor reads the financial news, while nearly 40% invest without a full understanding”. It’s indeed investors’ lack of awareness that, according to the Consob president, “generates a wrong attitude towards the financial choices”, reporting consequently “not satisfactory results, as over a half of the investors rely on informal advice”, rather than on professional consultants. Filling this gap must be a priority since it’s in the interest of both financial industry and investors.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi