Credit Suisse: Rapid growth in Italian AUM to continue

Credit Suisse’s research suggests there is potential for an incremental €0.3bn-€0.4trn of inflows for the Italian funds industry, if sovereign bond and bank bond holdings move in-line with major European country averages.

The Italian funds industry has experienced particularly strong growth of about €350bn of net new money since the start of 2013. The increase has been driven by low yields, which have encouraged savers to seek out risk assets –Italian savers are amongst the most risk averse in Europe.

In addition, Italian banks have been rotating their customers out of low yielding sovereign and bank bonds, which saw cumulative net outflows of €300bn since the start of 2012, and into fee paying fund products.

“We think the continued low rate environment, together with a still low penetration of funds products within household financial assets in Italy, and more recent tax disincentives for bank bonds
(the tax rate has doubled to 26% in recent years) leaves scope for significant further growth,” reads a Credit Suisse report on Italian asset manager Azimut.

“For the independent players in the investment fund market, we think reluctance by Italian savers to rely on the Italian banking system also works in their favour, and has helped
them to grow at a faster pace than the industry as a whole,” Credit Suisse said.

Azimut has seen an 18% CAGR in AUM over the last five years. It has consistently generated superior net inflows — an average of 13% in net new money, versus the Italian industry as a whole, with a 4% average.

The growth was riven by “strong new financial advisor hires and best-in-class advisor productivity”,  Credit Suisse said.

Alessandro Varaldo, CEO and managing director of Amundi SGR told InvestmentEurope recently that “advisory is the key driver for future growth in Italy’s asset management industry”.

Italy’s funds industry saw its AUM increase to €1.85trn by the end of March, and net inflows in the first quarter of this year reached €26.7bn.

Most of the inflows (€24bn) came from banks, as the Italian banking sector is “investing significantly in their advisory division for funds,” Varaldo said.

“Advisory, the capability to provide global advisory to the final client, is the key driver for the future and development of the asset management industry,” he said.

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