Italian Fund to Add Infrastructure, Real Estate

Solidarietà Veneto’s private market experience helped build confidence in beefing up alts exposure.

Italian pension fund Solidarietà Veneto will add some new alternatives to its investment portfolio for the first time, the organization announced.

Two new asset classes, infrastructure and real estate, are set to enter the $1.5 billion plan’s asset mix for the first time as experience from private market investments have given Solidarietà officials the confidence to invest in other alts as well as continue to develop other areas.

The fund, which houses the retirement assets of pensioners in the Veneto region, also wants to further diversify its allocations, as traditional markets “remain in ‘hostage’ of the policies and announcements of the central banks” during the first half of 2019. According to the plan, Solidarietà’s current alts mix is too small to make an impact during a downturn. It did not disclose how much of the total portfolio was invested in alternatives.

“Precisely for this reason, in its last review of the strategic asset allocation, the Veneto Solidarity Board has planned a gradual increase in the share allocated to so-called ‘alternative’ investments,” it said, adding that environmental considerations have become a popular topic in recent meetings.

Solidarietà also announced some tweaks to one of the four portfolios in which it splits its assets across (the dynamic fund, income, prudent, and guaranteed TFR). The dynamic fund will add more equities, going to 54% from 50%, and shed its bonds to 46%, from 50%.

“The intention is to compensate for the greater volatility deriving from the increase in the shareholding, with a deeper diversification and a more effective risk/return ratio, which will benefit the young people associated with this line,” the fund said.

All sub funds saw positive returns in the first half of 2019, with the dynamic fund returning 6.09% due to strong stocks. Income, prudent, and guaranteed TFR returned 3.93%, 3.59%, and 1.03%, respectively.

The fund started its foray into alternatives in 2013, with private credit and private equity investments. It did not say when either change would take effect.

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