The Italian lawyers’ pension fund, Cassa Forense, has decided to increase investments in private equity, infrastructure and equities in a new strategic asset allocation (SAA) for the period 2023-2025.
Under the new investment strategy, the pension fund is increasing allocations to private equity by 1%, infrastructure by 0.5%, and to global equities excluding Europe by 1.5%. It will reduce European equities by 0.5%, according to the pension fund’s preliminary budget for 2023.
The scheme is also planning to cut investments in real estate by 2% and bonds by 1%, particularly government bonds (EMU Fixed Rate) by 1.5%, and slightly increasing the weight of the inflation-linked government bonds by 0.5%, it added.
The share of closed-end funds, illiquids and real estate alternatives in its portfolio is set to increase from the current €2.9bn to €4.4bn at the end of 2027, making up close to 19% of the total assets, taking in to account commitments and reinvestments.
In the new strategy, the pension fund is also redefining its allocation to corporate bonds in its portfolio, in favour of European investment grade corporate bonds by 0.5%, to high-yield corporate bonds by 0.5%, and to liquid alternatives by 0.5%.
The new SAA foresees 41% of the fund’s total assets invested in bonds, including 24% in government bonds, 8% in corporate bonds and 9% high-yield bonds, 26% in equities, 4% in liquid alternatives, 12% in illiquid alternatives, including 1.5% in private debt, 5.5% in private equity and 5% in infrastructures, 13% in real estate, and 4% in cash.
Cassa Forense’s tactical asset allocation for 2023 foresees instead 40.8% of its assets invested in bonds, including 23.9% in government bonds, 8.4% in corporate bonds, 8.5% in high yield bonds, 25.6% in equities, 4% in liquid alternatives, 10.6% in illiquid alternatives, 12.7% in real estate, and 6.4% in liquidity, according to the preliminary budget.
The asset and liability management analysis has shown that Cassa Forense is in an accumulation phase, meaning that liquidity that can be invested will increase to €6.5bn by the end of 2027, according to the statement.
Cassa Forense has seen net assets growing from €15.21bn in 2021 to €16.31bn in 2022, and it is expecting assets to raise to €17.20bn in 2023.
The growth of close to €1bn a year has led the management of the pension fund to choose to set up a multi-segment vehicle (SICAV/SICAF) under Italian law for the management of one part of the securities in its portfolio.
Part of the assets will be managed by an asset management company – Società di Gestione del Risparmio (SGR) – selected through an European tender process to manage at least €1bn in the SICAV and SICAF vehicles, with the latter integrating closed Alternative Investment Funds, for example for real estate.
The SGR will rely on a custodian bank selected by Cassa Forense.
Additionally, CBRE is looking at investment opportunities in the German, Spanish and French markets, especially cities like Berlin, Hamburg, Munich, Frankfurt, Paris, Madrid and Amsterdam, on behalf of Cassa Forense.
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