Italy: Enpam plans to build up global bond portfolio

Rome: Enpam, the Italian doctors’ pension scheme, is planning to cut its short-term bond portfolio gradually, in favour of global bonds to extend its overall duration boosting yields in its investment portfolio, it said in its latest financial statement.

The pension fund underlined that now the macroeconomic environment offers investment opportunities, not seen for some time in government and corporate bond markets, to build positions to hedge liabilities in its liability-driven investment (LDI) portfolio.

Enpam is introducing a new LDI strategy. From this year, the scheme will use its liquidity reserve of €4bn – which is made up of a short-term government bond segment (euro government bonds with maturities of up to three years) – to a greater extent, it added.

It will pick macro/micro asset classes for public market investments to identify further sources of returns both in equity and bond segments.

In private markets, the pension fund aims to cement its private equity and private debt programmes, targeting net positive cash flows starting from 2026, with a peak in 2029 of around €600m, it added in the financial statement.

Enpam divested €842m worth of real estate assets through its Project Dream. It is now looking instead for collective investment undertakings to invest directly in real estate, excluding funds of funds and debit/credit funds, and with a focus on Italy.

The scheme allocates 2.5% of its investments to cash, 45% to bonds, 12% to equities, 10.5% to alternatives, and 30% to real assets, according to the strategic asset allocation mentioned in the financial statement. It has €25.35bn of assets under management.

Enpam ended 2022 with operating profits exceeding €179m, after paying €147m in taxes, and benefits worth €2.87bn, an increase of €346m year-on-year.

Write downs on invested assets hit Fondazione Enasarco, the Italian pension fund for sales representatives, last year for a total of €256m, including €139m relating to real estate allocations.

However, gross financial income grew by 67%, from €86m in 2021 to €145m in 2022. Assets under management grew by 2% year-on-year in 2022 to €8.3bn.

The so-called legal reserve, or net assets, totalled €5.6bn last year, compared with €5.4bn in 2021. Contributions increased from €1.25bn in 2021 to €1.30bn last year, against total outflows for pensions of €1.08bn.

The number of members continued to decrease by 1,400 last year, while the number of retirees has increased by 2,100.

The four sub-funds of Laborfonds, the Trentino-Alto Adige/Südtirol regional pension fund, recorded positive returns in the first quarter of this year.

The ‘Linea Garantita’ returned 1.07%; ‘Linea Prudente Etica’, 2.70%; ‘Linea Bilanciata’, 2.77%; and ‘Linea Dinamica’ 4.44%, In 2022 the sub-funds recorded negative results of 1.58%, 12.40%, 11.43% and 11.53%, respectively, according to the scheme’s latest financial report.

The performance recorded in the first quarter of this year is a sign of a return to “normality” that was missing last year, general director Stefano Pavesi said.

Uncertainties remain with regard to economic growth outlook, geopolitical conflicts, interest rates, the crisis in the banking sector, and inflation still at high levels and well above the European Central Bank’s target, Pavesi added.

The number of members at Laborfonds has increased by 2.6% year-on-year in 2022 to 134,330, and the number of member companies.