The Italian Asset Management market

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Noah Thompson
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1 key figures Research Department

The European Investment Fund Industry Net assets & sales by fund / fund group

2 1. Summary statistics Open-end funds Mandates A snapshot of the insurance market The recovery, some tentative explanations 2. The European Investment Fund Industry Net assets & sales by fund / fund group domicile 3. Savings & Wealth Household saving rate: trend & int l comparison Household financial portfolio & private pension plans

3 1. Summary statistics Open-end funds Mandates A snapshot of the insurance market The recovery, some tentative explanations 2. The European Investment Fund Industry Net assets & sales by fund / fund group domicile 3. Savings & Wealth Household saving rate: trend & int l comparison Household financial portfolio & private pension plans

4 The Italian AM market (Jan 2016: Apr 2017) % 1,833 Mand % , Perf :M % 1, I Perf IV E 51% 50% II III % I % Funds 898 Dec 2015 Dec 2016 Apr

5 Net flows (monthly data) bn Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Monthly data. Source: Assogestioni. 5

6 Product breakdown :M I 0.03 :M IV 2017 I II III Open end Funds Retail Mandates (discretionary portfolios) :M % 4% % 2% % II III IV Closed end Funds Institutional Mandates :M II III 0.5 IV 2017 I II +2.7 III +1.3 IV 2017 I 6

7 Long term trend bn, yearly data. Source: Assogestioni. 7

8 Top 15 Groups AuM (Apr 2017) Net flows 2017 :M % 1% 2% 3% 4% 5% 0% 2% 4% 6% 8% 10% GENERALI % EURIZON % FIDEURAM 5% PIONEER INVESTMENTS 7% POSTE ITALIANE 4% ANIMA HOLDING 58% BLACKROCK UBI BANCA 3% n.a. n.a. 12% ALLIANZ AMUNDI 8% 15% MEDIOLANUM 2% 72% AZIMUT BNP PARIBAS AXA BANCO BPM ARCA 81% bn Funds Mand. x%: Mkt share Net sales as % AuM 8

9 Open-end funds: domicile breakdown Dec Dec Apr % 26% 30% 42% 28% :M4 Domestic +3.5 R trip/offshore +6.9 Foreign % I :M4 AuM & net flows, bn. 9

10 Long term trend: open-end funds bn, yearly data. Source: Assogestioni. 10

11 Top 15 Groups (open-end funds only) AuM (Apr 2017) Net flows 2017 :M % 2% 4% 6% 8% 10% 0% 4% 8% 12% 16% EURIZON % FIDEURAM 5% PIONEER INVESTMENTS 9% GENERALI 8% BLACKROCK 7% n.a. n.a. ANIMA HOLDING 6% 50% MEDIOLANUM 5% AZIMUT 3% UBI BANCA JPMORGAN AM AMUNDI 67% 12.8% +21% ARCA PICTET INVESCO 2% Q1 FIDELITY n.a. n.a. DEUTSCHE BANK 79% bn Domestic R trip/offshore Foreign x%: Mkt share Net sales as % AuM 11

12 Asset Class breakdown TOTAL 21% 8% 4% 43% 24% DOMESTIC 8% 8% 2% 39% 41% 247 bn 27% R TRIP/OFFSHORE 18% 7% 5% 45% 24% 352 bn 38% FOREIGN 35% 11% 3% 41% 10% 325 bn 35% 0% 20% 40% 60% 80% 100% Equity Balanced Money Market Bond Flexible Hedge March

13 Equity & balanced funds AuM (Mar 2017) Net flows 2017 I % 2% 4% 6% 8% 0% 3% 6% 9% 12% ITALY EURO AREA 4% 5% EUROPE 20% AMERICA 14% PACIFIC AREA 5% EMERGING MKTS 9% SPECIAL. COUNTRY 4% GLOBAL 24% SPECIAL. SECTOR 10% OTHER 5% BALANCED bn Domestic R trip/offshore Foreign x%: Mkt share + Net sales as % AuM 13

14 Money mkt, Bond, Flex & Hedge funds AuM (Mar 2017) Net flows 2017 I % 4% 8% 12% 16% 20% 0% 6% 12% 18% 24% MM FUNDS ITALY EURO GOV. SHORT T. EURO GOV. M/L TERM EURO CORPORATE / HY DOLLAR AREA GLOBAL EM MIXED SPECIALIZED FLEX (BOND) 1% 6% 8% 10% 3% 7% 7% 18% 20% 20% +7.6 FLEX HEDGE bn Domestic R trip/offshore Foreign x%: Mkt share Net sales as % AuM 14

15 Net & gross flows Net ( bn) 40 Gross ( bn) Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q % 40% 30% 20% Gross Sales Gross Redemptions Net Sales Funds w/net Sales>0 15

16 The blockbuster effect : top quartile funds take all Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Net flows, bn. I II III IV Top 1% New Stories 16

17 New stories tag cloud Year New funds

18 Mandates: AuM & Net Sales trends AuM (Mar 2017) Net flows 2017 I % 1% 2% 3% 4% 5% 0% 3% 6% 9% 12% DISCRETIONARY MANDATES (GPF) 4% DISCRETIONARY MANDATES (GPM) 10% PENSION PLANS 9% INSURANCE PRODUCTS (TRADITIONAL) % INSURANCE PRODUCTS (UNIT & INDEX L ED) 8% 13% OTHER bn 8% Foreign Co. Domestic Co. x%: Mkt share Net sales as % AuM 18

19 Top 15 Groups (mandates only) AuM (Apr 2017) Net flows 2017 :M % 1% 2% 3% 4% 5% 0% 3% 6% 9% 12% 15% GENERALI % EURIZON % +5.5 FIDEURAM 5% POSTE ITALIANE 7% PIONEER INVESTMENTS 6% ALLIANZ 4% 76% AXA 3% UBI BANCA 2% AMUNDI BNP PARIBAS +26.2% BANCO BPM ANIMA HOLDING CREDITO EMILIANO 1% 87% BLACKROCK CREDIT SUISSE n.a. 14.7% n.a. 31% BANCA ESPERIA bn 93% Retail Instit. x%: Mkt share Net sales as % AuM 19

20 Insurance Mandates & Captive/Affiliated Insurers GENERALI INVESTMENTS GENERALI ASSICURAZIONI (Gr.) Italian Market: 30% EURIZON CAPITAL / FIDEURAM INTESA SANPAOLO VITA (Gr.) POSTE ITALIANE POSTE VITA PIONEER INVESTMENTS UCB (JV AVIVA / ALLIANZ / CNP) ALLIANZ ALLIANZ ASS. (Gr.) Italian insurance market (Dec 2016) AXA AXA ASS. (Gr.) AMUNDI CREDIT AGRICOLE VITA BANCO POPOLARE BP (JV AVIPOP / POPOLARE VITA) % UBI BANCA UBI BANCA (JV AVIVA / LOMBARDA VITA) BNP PARIBAS BNPP CARDIF VITA bn Mandates Technical Res. bn, December Source: Assogestioni, balance sheets. 20

21 Dec Max Unit&Index l. Life Insurance Market: long-term trend March % Funds 24% Bond 69% Dec Dec bn, yearly data. Source: Ania, Ivass. 21

22 Top 10 Life Insurance Groups Technical Reserves (Dec 2015) Flows GENERALI Generali Ass./Generali Italia/Alleanza Ass./BG Vita INTESA SANPAOLO Intesa Sanpaolo Vita/Fideuram Vita POSTE ITALIANE ALLIANZ UNIPOLSAI MEDIOLANUM Allianz/Creditras Vita Unipolsai/Popolare Vita/Bim Vita/Arca Vita 55% 71% AVIVA AXA BNP PARIBAS CATTOLICA 86% bn Class III (unit/index) x%: Mkt share Class I & Other + Net flows Premiums 22

23 Top 10 Unit&Index Linked Groups Technical Reserves (Dec 2015) Flows INTESA SANPAOLO Intesa Sanpaolo Vita/Fideuram Vita ALLIANZ MEDIOLANUM GENERALI POSTE ITALIANE OLD MUTUAL Allianz/Creditras Vita Generali Ass./Generali Italia/Alleanza/BG Vita 54% 71% AVIVA CNP ASSURANCES UNIPOLSAI AXA 91% bn x%: Mkt share + Net flows Premiums 23

24 1. Summary statistics Open-end funds Mandates A snapshot of the insurance market The recovery, some tentative explanations 2. The European Investment Fund Industry Net assets & sales by fund / fund group domicile 3. Savings & Wealth Household saving rate: trend & int l comparison Household financial portfolio & private pension plans

25 A pro-cyclical market MSCI WORLD (Loc) bn, yearly data. Source: Assogestioni, MSCI. 25

26 ... in search for yield BTP Yield (Rendistato) apr % Yield. Source: Bank of Italy. 26

27 AM Market, GDP & Bank credit bn Net sales (r.) Corporate loans (I.,index) GDP (l.,index) Italy Germany France UK I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I Source: Assogestioni, Bank of Italy, Eurostat. 27

28 Households: less bonds, more funds (flow view) bn Q3 Currency&Deposits Italian Gov.Bonds Bank Bonds Investment Funds Pension Funds&Life Products bn. Source: Bank of Italy. 28

29 Households: less bonds, more funds (stock view) Total Asset Currency & deposits Bonds Issued by Total banks Total Stocks Listed Investm ent funds Pension funds & life pr Italy bn % % % % % % % , % 22.6% 1.9% 19.3% 2.8% 5.8% 8.7% , % 16.6% 6.4% 29.5% 5.4% 17.0% 10.0% , % 19.0% 7.1% 28.2% 2.4% 11.0% 14.2% , % 19.8% 10.1% 19.9% 2.0% 7.8% 17.4% , % 19.4% 9.8% 19.6% 1.6% 7.7% 17.6% , % 10.7% 4.6% 23.3% 1.6% 11.1% 20.0% 2016 Q3 4, % 10.0% 3.8% 20.3% 1.3% 11.9% 21.5% 2016 Q3 France 4, % 1.3% n.a. 20.7% 4.1% 6.3% 34.7% Germany 5, % 2.9% n.a. 10.2% 5.0% 10.1% 31.1% UK 7, % 1.7% n.a. 7.9% 2.5% 2.0% 61.5% USA 65, % 5.1% n.a. 35.4% n.a. 10.7% 32.9% %. Source: Eurostat, OECD, BCE, Deutsche Bundesbank. 29

30 The uptick of the saving rate is good news for the industry 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% Q3 0% EU avg Italy Germany France UK Gross household saving rates. Source: Eurostat. 30

31 Banks: no more dependent on funding from retail investors Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Retail Bank Bonds Domestic and Round Trip Funds Foreign Funds Q3 Quarterly flows, bn. Source: Assogestioni, Bank of Italy. 31

32 25... and urged to sustain profitability through non interest-based sources of revenues Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Funds flows, captive Man.Cos (l.) Net interest margin (r.) bn. Source: Assogestioni, bank balance sheets (Top 5 groups). 32

33 The success of funds with high margins (target-date funds) 0% 4% 8% 12% 16% 20% 0% 6% 12% 18% 24% MM FUNDS ITALY EURO GOV. SHORT T. EURO GOV. M/L TERM EURO CORPORATE / HY DOLLAR AREA GLOBAL EM MIXED SPECIALIZED FLEX (BOND) 1% 6% 8% 10% 3% 7% 7% 18% 20% 20% +7.6 FLEX HEDGE bn Domestic R trip/offshore Foreign x%: Mkt share Net sales as % AuM 33

34 1. Summary statistics Open-end funds Mandates A snapshot of the insurance market The recovery, some tentative explanations 2. The European Investment Fund Industry Net assets & sales by fund / fund group domicile 3. Savings & Wealth Household saving rate: trend & int l comparison Household financial portfolio & private pension plans

35 Net Assets by fund domicile 3,701 +6% +13% 14,142 +6% +17% 1,886 +9% +9% 1,784 +3% +6% 1,466 +4% +13% 2, % +14% 61% Ucits AIF 38% MM +7% 39% 16Q4 15 Growth rate 93% Spezialf % % +13% Germany 14% France 13% UK 11% Switzerland 4% Italy 2% Luxembourg 27% Ireland 15% Europe 100% 2016Q4 bn. Source: Efama, AFG, BVI. 44% 42% 35

36 Net sales by fund domicile Italy France Germany 8% 6% 4% 2% +0% +2% +4% +6% +8% 8% 6% 4% 2% +0% +2% +4% +6% +8% 8% 6% 4% 2% +0% +2% +4% +6% +8% 14% III IV II I IV III II I IV III II I % % UK 8% 6% 4% 2% +0% +2% +4% +6% +8% Luxembourg 8% 6% 4% 2% +0% +2% +4% +6% +8% Europe 8% 6% 4% 2% +0% +2% +4% +6% +8% II I I IV III IV III II IV III II I Net sales as a % of AuM. Yearly data in bn. Source: Efama, BVI. 36

37 Net Assets by fund domicile Long-term growth Ireland Luxembourg UK France Germany 100 Italy Index values. Source: Efama. 37

38 Net Assets by fund group domicile 3,701 +6% +13% 14,142 +6% +17% 2,478 +8% +10% Exp 10% 2,115 +7% +8% 2,769 +4% +13% Exp > 90% 60% 2, % +14% Domestic Funds Ucits 61% Domestic Funds AIF 1,041 +5% +7% % +15% 36% 39% Luxembourg Funds Irish Funds 16 Q4 Growth rate 15 Germany 24% France 16% UK 47% Switzerland 48% Italy 51% Luxembourg Ireland Europe 2016Q4. bn. Foreign (Round-trip) share in %. Est. on Efama, Assogestioni, ALFI & IFIA data. 38

39 Net sales: fund domicile vs. fund group domicile 14% 9% I II I Italy 8% 6% 4% 2% +0% +2% +4% +6% +8% III IV II IV III II IV I III II I UK 8% 6% 4% 2% +0% +2% +4% +6% +8% IV II III IV II III I I III IV % France 8% 6% 4% 2% +0% +2% +4% +6% +8% 8.1% Luxembourg 8% 6% 4% 2% +0% +2% +4% +6% +8% Germany 8% 6% 4% 2% +0% +2% +4% +6% +8% Europe 8% 6% 4% 2% +0% +2% +4% +6% +8% Net sales as a % of AuM. Fund domicile (blue), fund group domicile (black). Est. on Efama, Assogestioni, ALFI, IFIA & BVI data. 39

40 1. Summary statistics Open-end funds Mandates A snapshot of the insurance market The recovery, some tentative explanations 2. The European Investment Fund Industry Net assets & sales by fund / fund group domicile 3. Savings & Wealth Household saving rate: trend & int l comparison Household financial portfolio & private pension plans

41 Household saving rates in Europe 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% % EU avg Italy Germany France UK Gross household saving rates. Source: Eurostat. 41

42 How income & consumption Δ% affect saving rates 1.5% 16% consumption 1.0% 0.5% 0.0% 14% 12% 10% 14.1% Italy 10.6% -0.5% 8% -1.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% income 2008Q4:2016Q4. Source: Eurostat. 42

43 How income & consumption Δ% affect saving rates 1.5% 18% 17.1% 1.0% 16% 14% Germany 17.1% 0.5% 12% 10% 0.0% -0.5% 18% 16% 14% 12% France 14.7% 14.0% -1.0% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% income 10% Q4:2016Q4. Source: Eurostat. 43

44 How income & consumption Δ% affect saving rates 1.5% 12% 11.1% 1.0% 10% UK consumption 0.5% 0.0% 8% 6% -0.5% 5.4% 5.2% -1.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 4% income 2008Q4:2016Q4 Source: Eurostat. 44

45 Household financial portfolio breakdown Total Issued by banks Total Listed Italy bn % % % % % % % , % 22.6% 1.9% 19.3% 2.8% 5.8% 8.7% , % 16.6% 6.4% 29.5% 5.4% 17.0% 10.0% , % 19.0% 7.1% 28.2% 2.4% 11.0% 14.2% , % 19.8% 10.1% 19.9% 2.0% 7.8% 17.4% , % 19.4% 9.8% 19.6% 1.6% 7.7% 17.6% , % 10.7% 4.6% 23.3% 1.6% 11.1% 20.0% 2016 Q3 4, % 10.0% 3.8% 20.3% 1.3% 11.9% 21.5% 2016 Q3 Total Asset Currency & deposits Bonds Stocks Investment funds Pension funds & life pr France 4, % 1.3% n.a. 20.7% 4.1% 6.3% 34.7% Germany 5, % 2.9% n.a. 10.2% 5.0% 10.1% 31.1% UK 7, % 1.7% n.a. 7.9% 2.5% 2.0% 61.5% USA 65, % 5.1% n.a. 35.4% n.a. 10.7% 32.9% %. Source: Eurostat, OECD, BCE, Deutsche Bundesbank. High level of direct investment (~ 35%) Decreasing amounts of bank issued bonds (5.0%) Negligible level of listed shares. High level of unlisted ones. Funds: rise until 1999 (18%) then down, then again up. Pensions/life product: up but still too modest. 45

46 Managed products in household portfolios Investment funds Pension funds & life products 20% 18% 16% 14% abnormally high? 70% 60% 50% 12% 10% 8% 40% 30% 6% 4% 2% 0% too low? Q Q3 20% 10% 0% Italy France Germany United Kingdom USA Source: Eurostat, OECD, BCE, Deutsche Bundesbank. 46

47 Private pension plans at a glance (2nd & 3rd pillar) (,000) 2008 Member breakdown 7,227 22, % 21.0% Private sector employees 5,174 13, % 26.0% Public sector employees 174 3, % 4.0% Self employed 1,879 5, % 19.0% (,000) % '15 % 7y % ( m) % GDP Vehicle breakdown 7, % +11% +49% 140, % 2015 Working pop. (est.) Membership rate Contractual p.f. 2,419 33% +24% +18% 42,546 Open p.f. 1,150 16% +9% +45% 15,430 Ind. Insurance Plans (PIP) 3,028 42% +4% +120% 26,835 Ante 1993 p.f. ('pre existing') 645 9% 0% 5% 55,299 Membership rate 2015 Members Assets Source: Covip, Istat, RGS. 47

48 key figures Research Department

The Italian Asset Management market

The Italian Asset Management market key figures Research Department 1. Summary statistics Open-end funds Mandates A snapshot of the insurance market The recovery, some tentative explanations 2. The European Investment Fund Industry Net assets