M&G Investments roots itself in Italy

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Opening up for business in Italy back in 2004, M&G Investments has seen a significant rise of inflows in the last five years.

M&G started rooting itself in Italy a decade ago. More recently it has seen a sharp rise in business locally, sending AUM from some €300m in 2008 to €14bn by the end of 2014; and
it has signed a number of distribution agreements with the country’s distribution networks to get to their retail clients.

Among the biggest partnerships signed in 2014 were Banca Mediolanum; Banca Generali; Credem; Banca Euromobiliare; Barclays; Banca Popolare di Vicenza and CheBanca!, all ofwhich offer M&G direct access to their retail client bases through their products.

Over the past summer, the company also hired Costanza Morea as sales manager. This is in addition to the recruitment of Nicola Mutinelli the previous autumn, a move made to strengthen and develop relationships with institutional and discretionary clients.

“Although our results did not appear within Assogestioni’s ranking until the end of 2014 for compliance reasons, we have seen an impressive year of inflows, which came in at anet €4.4bn, placing us in the third position among foreign players after Invesco and DWS, and ahead of JP Morgan,” says country head Matteo Astolfi, who has been leading the Italian office since 2008.

M&G’s business is currently split between 40% in the wholesale market and the remaining 60% on the retail side through financial advisers’ networks and private bankers, which the
company has been growing consistently over the past year, and which is expected to reach 70% in 2015.

The provider offers 35 Sicav funds to the local market, most of which invest in multi-asset and flexible funds, which M&G estimates accounts for over 80% of its total inflows.
As for now, Astolfi says the firm will remain focused on this offering and is looking at possibly launching some new product towards the second half of 2015.

“For us, the income generation theme remains key and Italy is the perfect market in which to bring it forward. This theme is linked to demographics: that of the ageing population, which is set to remain for the next 10 years at least,” Astolfi says.

Because Italy is seen as such an ideal country for M&G’s business priorities, Astolfi says the headquarters in London are interested in sponsoring the growth of the Italian office, which today counts a total of 18 people and is set to welcome at least two further appointments in coming months.

Retracing the origins of the company’s success in Italy, Astolfi points to two main reasons: the average performance of the funds, and the client service model which keeps close contact with the distributors.

“We travel constantly through the country to talk to our distributors regularly,” he says.
Currently, M&G’s business is mainly focused in the northern part of the country, but Astolfi does not exclude the possibility of expanding its presence elsewhere as the expertise of the group consolidates in Italy.

Looking at asset classes and distribution, and discussing the possibility of a switch of preference from fixed income to equities among Italian investors, Astolfi concludes: “Fixed income investing will never change in Italy.”

“We are witnessing a shift within the fixed income space as Italian investors look for yields away from government BTPs, but fixed income per se will remain the main attraction among investors for the next 50 years. And that’s why M&G is here, to help Italian investors diversify within the fixed income space, maybe adding a little bit of multi-asset.”

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