Italian pension funds Fondo Pegaso, the scheme for employees of Italian utility companies, and Fondenel, the scheme for the executives of electricity and gas company Enel, are restructuring their sub-fund offerings for their members, introducing new life cycle options.
Fondo Pegaso will set up from May a new sub-fund (‘Crescita’) to boost equity investments. The sub-fund will invest 70% of its assets in equity, and 30% in bonds, the scheme said explaining the changes.
The scheme currently does not give the possibility to members with a long-term investment horizon to choose a sub-fund with an allocation to equities of more that 50%, it added. Currently, its ‘Dinamico’ sub-fund invests 50% of assets in equity and 50% in bonds.
Fondo Pegaso has decided to restructure its ‘Dinamico’ sub-fund, opting instead for offering it as an investment profile, which invests 50% in its ‘Crescita’ subfund and 50% in its ‘Bilanciato’ sub-fund.
The fund is now also offering a second investment profile – ‘Prudente’ – which invests 40% in its ‘Bilanciato’ sub-fund and 60% in its ’Garantito’ sub-fund.
It still offers its sub-funds ‘Garantito’, ‘Bilanciato’ plus the new ‘Crescita’, which suits members that are at the beginning of their careers, prone to taking risks to achieve higher returns, it said.
Moreover, the pension fund has adjusted its life cycle option, increasing its equity allocation by 10% for the ‘Crescita’ option and by 20% for the ‘Dinamico’ option, for members that have to work more than 24 years before retiring.
The life cycle option follows a de-risking trajectory, switching to a higher allocation of bond investments as members approach retirement, according to the scheme.
Meanwhile, Fondenel has also designed a new life cycle option, available to members in two risk /return profiles, so-called Standard and Conservative.
The investment strategy for both profiles foresees an automatic, semi-annual rebalancing of the portfolios, to gradually reduce equity investments in favour of bond investments in the scheme’s bond and inflation-linked bond sub-funds.
Assets will be allocated mainly through the scheme’s money market sub-fund in the last years of contributions, exclusively in short-term money market and bond instruments from public and private issuers in OECD countries, denominated in euro, it added.
The periodic reallocation of assets and contributions aims to minimise the risks associated with the market timing of investment/divestment operations, according to Fondenel.
The scheme has renamed its “Inflation Linked” sub-fund as “Inflation-Linked Bond” to underline the correlation between inflation and government bonds, it said.
The change comes as it has swapped State Street Global Advisors with Amundi to run its equity sub-fund. Amundi previously managed the other three Bond, Inflation-Linked Bond and Money Market sub-funds, the scheme added.
The equity sub-fund returned 15.93% last year, followed by the bond sub-fund with 4.13%, the inflation-linked bond option with 2.65%, and the money market option with 3.04%, it said.
Fondenel has also picked Generali Italia as pension pay-out manager for the next five years, ending its contract with Cattolica Assicurazioni.
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