The board of Inarcassa, the Italian pension fund for self-employed engineers and architects, recently approved the fund’s new asset allocation strategy for the next five years resulting in a boost to its alternative investments by over €900m.
The boost represents an increase of 6.3% compared to the current allocation level. The €15.2bn pension fund is looking to maximise returns without excessively increasing the risk profile of its portfolio as well as striving to maintain high diversification.
The boost to alternatives will come at the expense of real estate and fixed-income assets, according to Graziana Scampoli, head of alternative investments office.
“We will expect an increase in private markets with particular focus on private equity and infrastructure equity, both global and European as well as Italian. There will also be an increase in listed equity with particular focus on developed markets,” she said.
“Since the early 2000s, Inarcassa has had a consistent focus on private markets, diversifying across strategies, geographies and instruments. Investment activity has led to a current allocation of over €3.4bn in terms of committed capital and €2.2bn in terms of Net Asset Value (NAV). For over 15 years, Inarcassa has focused on investment solutions targeted towards the ‘Real Economy’, to support the development and growth of both Italian and foreign unlisted companies”, she explained.
Scampoli said private equity is a particularly important component within the fund’s private markets portfolio.
“Within this asset class, we have approximately €1.3bn in commitment in about 90 funds, for a NAV that is around €800m, or about 5.4% of our total assets. The private equity portfolio has been among the best performing, particularly during periods of shocks in recent years such as COVID, inflation, and rising rates, having a buffer and stabilising function for the entire portfolio. As at August 2024 the international private equity portfolio recorded approximately a 13% net return, being the best performer within the entire private markets portfolio which recorded 7.3% net return,” she said.
“The new asset allocation for 2024-2029 is certainly challenging but should enable Inarcassa to generate the maximum possible extra return over the next five years that can be used to improve the adequacy of pension benefits for our engineers and architects,” she added.
The latest increase follows on from a previous private markets boost of €600m in 2023, out of which 40% went into private equity, private debt and infrastructure. At the time the focus was largely on the domestic market.
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