A golden semester for the asset management industry in Italy. After nine years of deep red and continuous redemptions by savers, the first six months of 2013 closed with record net inflows: 38 billion in full. But Domenico Siniscalco, former Minister of the Treasury and volcanic president of Assogestioni (the Confindustria of Italian and foreign funds operating in our country) as well as vice president of Morgan Stanley, he is not a man to rest on his laurels. “If for an entire six-month period – he comments – it was positive and it was also in a very particular month like June – we are on the eve of the holidays and it is a month full of tax deadlines – it means that the savings industry managed in Italy has finished crossing the desert and that after 9 years of crisis we are finally at the turning point. But now we need to think about phase 2 ". That is, to use up to 10% of the assets of the new generation Ucits funds to invest in the strengthening and development of Italian companies. For Italian capitalism it would be a revolution that can already start within the year. Here's how and why in the interview Siniscalco granted to FIRSTonline.
FIRSTonline – Professor Siniscalco, is witnessing the boom in managed savings in the midst of a recession a paradox or a miracle? How do you explain it?
SENESCALC – It is certainly the sign of the turning point of the asset management industry in Italy. Everyone is wondering why the collection of funds is growing but the answer is simple: mainly due to the liquidity effect generated by the ECB's policy. This effect, on the one hand, produces less competition from banks towards managed savings and, on the other, pushes the part of Italy that still manages to save to invest professionally by relying on the expertise of managers. What is happening before our eyes shows that – even in terms of savings – we are a patchy country. In the face of those who have lost their jobs and find it difficult to make ends meet, there are also those who continue to work and earn and look to the future by setting fire to the farmhouse. Since the beginning of the year, the funds have raised 39 billion euros net: it is an enormous sum that makes us think and makes us proud.
FIRST online Is it a passing phenomenon or a lasting turning point?
SENESCALC – There will always be ups and downs in funding, but the asset management industry in Italy is solid. Naturally we must not forget that we are talking about a river with many branches: there are open Italian funds on which Mediobanca's annual survey focuses, there are foreign law funds, there are roundtrip funds, there are insurance funds, there are asset management and each savings segment has its own specificities. But, having said all this, the foundations and the trend of the asset management industry are decidedly comforting and this is a fact that deserves consideration and that opens up new horizons.
FIRSTonline – Some time ago, however, you said that you can't live on your laurels and that it's time to think about phase 2 of savings: what exactly does that mean?
SENESCALC – I think that, faced with the difficulties of banks in granting loans to households and above all to businesses, it is essential that the asset management industry places itself at the center of the transformation that must make the financial system less bank-centric and that it increasingly represents the channel of the corporate financing market, especially in a country made up of a myriad of small and medium-sized companies. This is why Assogestioni has proposed that the fund industry can invest up to 10% of the assets of new generation funds (UCITS) in strengthening and developing Italian companies. It's Italian money that must not only be defended and valued but become useful to Italians.
FIRSTonline – 10% of the assets of new generation funds is a significant sum that can change the balance of Italian capitalism and send the stereotype of capitalism without capital to the attic. Is this what you propose?
SENESCALC – It is difficult to quantify exactly the amount of potential investment but the amount that can be invested in companies is certainly a macroeconomic mass, above all if one considers and adds the assets of the insurance companies which are stable and long-term investors by nature and which , like us, are looking for an allocation that is useful to their customers and useful to the country. Of course our goal is not to subvert the balance of Italian capitalism but more simply to make it normal and in line with the models of the most advanced countries, where business financing takes place through two channels: banks and the market.
FIRSTonline – The idea of investing the savings of Italians in companies is suggestive but are you sure that the fund managers are in agreement?
SENESCALC – The proposal comes from them. Assogestioni has taken it up and supported it but not let it down from above. Once out of the crisis, asset managers were the first to realize that it's time to overcome the all-Italian paradox according to which Italy saves but does not invest and therefore does not grow. We want to break this vicious circle, in the awareness that what is good for asset management is good for the country and vice versa. Already today, the legislation authorizes Ucits funds to invest up to 10 percent of their assets in illiquid assets and it is time to take advantage of this opportunity.
FIRSTonline – How should the investments of funds in companies take place? Who chooses where to invest?
SENESCALC – Methods can be different. Each asset management company can choose where to allocate part of its assets and in which companies to invest, or you can imagine a fund of funds where to channel 10% of the assets of all funds to invest in the development of Italian companies. What matters is having a clear objective: to valorise savings in order to make Italy grow by creating the market channel for business financing. And we are ready.
FIRSTonline – Do we need a law to leave?
SENESCALC – The laws and regulations, which have a European origin, are already there. We also talked about it with the Treasury, with the Bank of Italy and with Consob, receiving encouragement and appreciation. If we really succeed in creating a second market-based corporate financing channel, alongside the traditional financing of banks, it would be a great good for the whole country.
FIRSTonline – I imagine that to start such an operation you want tax breaks?
SENESCALC – Not at all. There is no trading logic. We start from the assumption that whatever is good for managed savings is also good for the country and vice versa. And that's that. It goes without saying that it is in the country's interest to encourage savers who invest stably over the long term, but we are ready to invest 10% of the funds' assets immediately. Without conditions. It would be a real revolution for the capital market in Italy and finally even the transfer of ownership of companies would take place without trauma. Italian capitalism would become a normal capitalism where the market for the property rights of small and medium-sized enterprises must also be normal.
FIRSTonline – How many years will it take for phase 2 of managed savings to start?
SENESCALC – Years? No, months. I hope that the first examples of funds that invest part of their assets in the equity of small and medium-sized enterprises can already be seen by the end of 2013. It is a bet from which everyone has to gain and which we can absolutely win. This is why it must be done and won immediately.
