Italian investors and bonds: Never-ending story

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More than a quarter of Italian portfolio (26%) is invested in bonds,  the Legg Mason’s Global Investment Study has revealed.

The percentage is the highest among the 20 countries surveyed, the asset manager has highlighted.

Equities (21%), investment real estate (20%),  cash or cash equivalent (19%), non-traditional investments (6%) complete theaverage Italian portfolio breakdown.

Moreover, Italian investors keep on believing in fixed income: indeed 30% is planning to increase the fixed income proportion in their portfolios in 2015 (while 32% is planning to increase the equity slice).

These are some of the most interesting features coming out from the new Global Investment Study made by Legg Mason Global Asset Management, one of the leading global asset managers. The study has been conducted in 20 countries and it has polled over 4,000 respondents (investors between 40 and 75 years old) with an average of investable assets around $1.7 mn in Italy.

The survey highlights an increasing need of income and investment able to get it among Italian investors: 94% say it is important/extremely important investing in income generating products. It is the highest  percentage in Europe. It is also registered an increasing trend over the last 12 month: in 2014 Legg Mason survey , indeed, it was the 73% of Italian investors talking about this need.

Although 27% of Italian investors affirm to have an aggressive risk tolerance, 58% could increase it for the opportunity to get more income.

Forty-nine per cent of Italian portfolio is invested therefore in income producing assets and, specifically, 27% of the slice invested in these specific assets is invested on international markets.

The new Legg Mason study confirms indeed the preference of Italian investors for the “out of home” markets: on average 29% of Italian portfolio is invested outside Italy. It is the highest percentage surveyed globally (13% in the USA, 12% in Spain, 16% in Germany, 15% in France, 22% in Belgium, 17% in China, 19% in Japan, 10% in Brazil).

Main drivers that let Italian investors consider international markets are:  the chance to diversify risks across markets (55%) and potential for higher returns than in the domestic market (51%).

To recap: bond passion, income need and preference for international markets. But what are main goals and reasons pushing Italian investors to move this way?

Fifty-five per cent of Italians want to maintain current lifestyle while 54% would like to grow wealth. For 49% the main goal is to protect wealth for family and children.

Moreover only 60% of Italian investors feel confident to have the ability to retire at the age they want to: it is the lowest  percentage detected  in Europe (79% in the UK, 76% in Germany, 70% in Spain)  and globally after South Korea (52%) and Chile (58%).

The Italian preference for international markets it is also confirmed looking at main investment opportunities in the next 12 months. According to Italian investors, they can be found in international equities (61%) and international bonds (54%). Only 34% look at domestic bonds.

Marco Negri (pictured), country head Italy at Legg Mason Global Asset Management, said: “Our new study confirms what can be defined an historical relationship between Italians and bonds. I think that what has happened on international markets over last years should lead Italian investors to consider the fixed income no longer, or not only, as a low risk asset class but as an investment sector where, if it is worked with right tools, investors can get opportunities able to satisfy the income need which is becoming an indispensable requirement.

“We believe that flexible bond strategies like the “unconstrained” one are nowadays one of the most effective solutions to face many challenges in the bond market, like volatility or the chance of an increasing in interest rates in the next future.

“The unconstrained bond strategies, which have the flexibility to get opportunities in the long term and manage risk tactically, can offer the best solution to the market challenges as well as for investors’ needs.”

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