Italy fund selector bond focus: “We now have to face election results,” delegates say

The impact of Italian elections on fund selectors’ day-to-day duties is likely to last much longer than initially expected, as Italy’s ability to attract investments is currently paying for the uncertainty left by electoral results, according to most of the 60 selectors who attended Investment Europe’s Italy Forum on March 5 in Milan.

The final outcome of the Italian elections held in the country in February was not forecasted at all, as after two week the country doesn’t have a clear government yet.

Five Star Movement founded by comedian Beppe Grillo is one of the biggest variables at the moment.

Grillo supports political reform and the easing of austerity but he has not made clear how he will be able to do that. The unstable political balance means uncertainty for fund selectors challenged with the need to reduce and control risk while keeping their strategy in place.

Risk and the ability to control it will be one of the key abilities that fund selectors will have to demonstrate in the next months.

“Italian elections have had a much bigger impact on the market and on our activity than initially expected. Uncertainty will last for a long period and given the nature of our business we are probably going to be affected by the political context,” said a fund selector at an Italian bank.

Meanwhile, uncertainty has put a brake on the expected migration from bonds to equities, which started to be forecasted at the end of December 2012.

“We are still very much on bonds at the moment. It takes a long time to build positive momentum, and just a day to lose it all,” the selector said.

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