‘If you think Italy is an easy market, think twice’

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The Italian asset management industry is one of the most successful in Europe at the moment. As inflows keep coming in steadily, many might be tempted to consider it an easy market to jump in.

If you are one of those, think twice, Sergio Trezzi (pictured), head of Sales and Client Service Retail in Continental Europe and LatAm. at Invesco, warns.

Trezzi joined Invesco in 1997, when the company’s Italian project was still being draft, and in 2001 he spearheaded the launch of the Italian office and led it to hold some €15bn in open-ended funds, according to industry association Assogestioni’s latest data (*) .

The recipe to get the flows coming, according to the country head, is to remain focused on investments and look away from vehicles other than mutual funds and advisory, with the latter especially attracting increasing attention among investors.

“Over the years, we realised that distribution has a pivotal role in the growth of a market like Italy and we have invested significant energy in expanding our distribution partnerships,” Trezzi explains.

In 2010 then, a second important decision was made by Invesco in light of the new rules set up by Solvency II and Basel II which made them bet more on third party managers. “Mifid II has considerably increased the need for transparency and client protection, combined with need of banks and insurance to focus on their core activity, while leveraging the investment strengths of the few global investment partners able to sustain the complexity of their distribution network. We understood on which products to focus our efforts (multi asset and European solutions) and we invested in resources to add qualitative support,” he says.

Offer diversified

Trezzi says that Invesco kept its Italian offer well diversified, ranging from money market to equity and fixed income, although the core part of the business has always remained on the multi-asset and fixed income products. “Both these segments are essential to the Italian investor base,” Trezzi highlights.

Just last year, Trezzi explains, Invesco has introduced a multi-asset product in Italy and has aimed at becoming a leader in the segment for the last four years and he says that is when the company realised that Italy is a market where asset managers need to be able to play their cards well.

“Italy can seem an easy market but it is not true, especially for international players. It is a very concentrated market and players coming from abroad need to knowledge, strategy and very good relationship with distribution platforms. Foreign investors should also bear in mind that the Italian market is normally very volatile, which makes reducing risk another priority,” he says.

Distribution challenges

Asked whether Invesco encountered any particular regulatory hurdle while setting up its Italian business, Trezzi says that in terms of proper regulation, the Italian market is not a difficult one to penetrate as, for instance, was one of the best placed in Europe to receive the Mifid II regulation. “Many concepts of the legislation were already embedded in the Italian code, so the country didn’t really struggle with its implantation,” Trezzi says.

However, the challenges were posed when the company came to establishing relationships with the local fund distributors. According to Trezzi experience, Italian distributors are on average more difficult to get to for international managers.

But Invesco has got through over the years, and it is now looking at pushing its Invesco Global Targeted Returns fund, which was launched in Italy in December 2013 and is being pushed strongly elsewhere in Europe too. “We will also look at more fixed income products as we believe we can add value there.”

(*) This data  does not include mandates, ETFs and sub-advisory mandates run by Invesco which bring AUM to more than €20bn.

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