In September 2016, the value of the financial assets of Italian households fell below 3.900 billion euros, with a drop of more than 100 billion compared to the end of 2015. In addition to the fluctuations in share prices, wealth suffers from the difficulties shown in setting aside new savings, a consequence of the weak dynamics of income.
Before the crisis, every Italian managed to invest on average almost 2 euros of new resources in financial assets every year; between 2012 and 2016, we fell below 320 euros. A much larger decline than that experienced by French families, while German families are the only ones to have managed to increase the flows of new financial investments.
Italian families are still rich today, but they are less so than they were in the past. In the mid-70s, every Italian had an average of almost 55 euros in financial assets, while in France it stopped at 50 and in Germany at 70. Today, the situation has reversed: the French and Germans have approached 65 euros of average wealth, the Italians have dropped below XNUMX.
Italian households have also been called upon to change the composition of their financial portfolios, to adapt it to an external context that is increasingly different from the past. Low interest rates, as well as a different assessment of risk, have, for example, made investment in both private and public bonds increasingly less convenient, while worries about the future have kept interest high in the liquidity, increasing the weight of deposits.
In search of the right balance between risk and return, families have increasingly turned towards professional savings management. Between 2012 and 2016, more than 330 billion euros of new resources were invested in mutual funds and insurance and pension products, which as a whole approached 1.400 billion in value, absorbing 35% of assets. This profound recomposition has made the portfolio of Italian families increasingly internationalised. 100 of the 170 billion euros invested in mutual funds in the last five years have been directly allocated to instruments issued by non-residents.
But, also a significant part of the amount invested in products managed by companies resident in Italy ended up in foreign securities, as a consequence of both the type of product chosen and the diversification carried out by the management company. An internationalization of the portfolio that appears to be deeper in Italy than experienced in the other main European economies.
The lower saving capacity penalizes the wealth of Italian families
During the first part of the crisis, Italian families had suffered a sharp drop in the value of financial wealth: from over 4 trillion reached in 2006 to just over 3.400 in 2011. A loss close to 600 billion which was then almost fully recovered in the following three years, thanks to constant growth which had brought the value of the assets to approach again the It is one of the many legacies of the crisis, which is showing its effects despite the ongoing recovery. Between 1995 and 2008, households were able to invest on average over 100 billion euros of new resources in financial assets each year. During the first recession, we had fallen just below 40; in the last five years, we have dropped to around 20, less than a fifth of what was recorded between 1995 and 2008.
The lower ability to set aside savings appears even more evident if we move from the aggregate values to the per capita values. Between 1999 and 2008, every Italian managed on average to invest almost 2 euros of new resources in financial assets every year; between 2012 and 2016, we fell below 320 euros. A drop of more than 80%, which is much larger than that experienced by French families, which went from almost 1.800 to just over 1.300 euros. The story is different for the German ones, which are, on the other hand, the only ones to have managed to increase the flows of new financial investments, exceeding the average 2 euros per year per capita.
Undoubtedly, Italian families are still wealthy today; they are, however, less so than they were in the past. In the mid-70s, every Italian had on average almost 55 euros in financial assets, while per capita wealth stopped at 50 in France and 70 in Germany. Today, the situation has reversed: the French and Germans have approached 65 euros of average wealth, the Italians have dropped below XNUMX.
Many deposits, more funds, fewer bonds in the assets of Italian families
The effects of the crisis do not stop, however, at the albeit significant impact on the ability to set aside new savings. Families were, in fact, also called upon to modify the composition of the portfolio, to adapt it to an external context that was increasingly different from the past. For example, low interest rates have made investing in both private and public bonds less and less convenient. Bank stocks, which in the years preceding the crisis had attracted the attention of savers, with almost 300 billion euro of new resources invested between 1995 and 2008 and a share in the portfolio that rose to over 10%, suffered significantly , also as a consequence of a different risk assessment, the result of the changes made to the European legislation.
Between 2012 and 2016, households divested 225 billion euros of bank bonds, ending up with only 4% of the portfolio. Even before the crisis, government bonds had lost importance, absorbing only a small portion of savings. In the mid-1995s, households invested around a fifth of their assets in government bonds, with a greater weighting for the short-term component. Between 2008 and 140, however, almost 5,5 billion euros were divested, bringing the share in the portfolio to just over 2012%. Sales continued in the following years, approaching 2016 billion between 140 and 3 and bringing the weight on total financial assets to XNUMX%.
In search of the right balance between risk and return, families have increasingly turned towards professional savings management. Mutual funds, which had lost importance in the first part of the 18,8s, with their share of the total portfolio falling from 1999% in 6,4 to 2008% in 2012, have returned to the center of savers' attention. Between 2016 and 170, over 100 billion euros of new resources were allocated to this type of investment, with an ever-increasing weight of products issued by non-resident companies, which managed to raise almost 12 billion in the last five years. The share of equity absorbed by mutual funds has therefore grown, exceeding XNUMX%.
Insurance and pension products have also gained importance, with over 160 billion of new investments made since 2012, with the share in the portfolio exceeding 23%. Overall, the value invested in professional asset management, considering both mutual funds and pension and insurance products, came close to 1.400 billion, absorbing more than 35% of assets, the highest value in the last twenty years.
However, concern for the future remains evident in household investment decisions, which leads to maintaining high interest in liquidity. Despite zero returns, between 2012 and 2016, nearly €160 billion of new resources were set aside in deposits. The overall balance reached 1.300 billion, about a third of total financial wealth. Analyzing the composition of savings, one last aspect deserves to be explored. Households have always shown a constant interest in investing in shares and equity investments, which in the Italian experience consists almost entirely of shares of unlisted companies, representative of investment in small and medium-sized enterprises, the backbone of our production system. After having almost quadrupled in the ten years preceding the crisis, exceeding 2006 billion euros in 1.300, the total value of shares and equity investments had decreased by about 50%, as a result of the first recession, to then recover part of what was lost and close again to 1.000 billion in 2015.
During the past year, however, the value of this investment recorded a new deep decline, losing almost 150 billion, mainly as a result of the lower valuation attributed to unlisted equity investments. Analyzing what happens to this type of investment, the aspect that deserves to be emphasized is not, however, so much the fluctuation of the value, which, affected by various factors, shows a high degree of volatility, but rather the flow trend of new resources invested. Since the outbreak of the crisis, investments in unlisted shares and equity investments have increased significantly. Between 1995 and 2008, the total flows of new resources destined for this type of activity had stopped below 10 billion; between 2009 and 2016, however, they approached 140 billion.
A growing interest, representative of the attention paid by entrepreneurs to their companies, thanks also to the reforms of the tax legislation which have gradually made investing in company assets more and more convenient. The last few years have therefore been the subject of a profound reorganization, which has made the portfolio of Italian families increasingly internationalised. The shift from the bond sector towards asset management and insurance was, in fact, accompanied by a growing recourse to foreign securities. In the last five years, 100 of the 170 billion euros invested by households in mutual funds have been allocated to instruments issued by non-residents. However, even a significant part of the amount invested in insurance and pension funds or products managed by companies resident in Italy ended up in foreign securities, as a consequence of both the type of product chosen and the
diversification carried out by the management company. An internationalization of the portfolio that appears to be deeper in Italy than experienced in the other main European economies.
In addition to deposits, many insurance products in the portfolio of French households
After the decline recorded at the start of the crisis, the value of French household financial assets has grown steadily, exceeding 2016 billion euros in September 4.600, over 1.200 billion more than in 2008 and almost double what it reached at the end of the XNUMX Ninety.
An increasing wealth, which has benefited from the ability of households to be able to set aside an always satisfactory share of savings, despite the difficulties encountered in the last period. Between 1999 and 2008, the French managed to invest an average of 110 billion euros of new resources each year in financial assets. In the last period, the value has decreased, remaining, however, close to 90 billion. In the composition of the portfolio, French households show great attention to security and liquidity. At the center of the choices we find insurance and pension products, to which over 210 billion euros have been allocated in the last five years, almost half of the total new resources allocated to financial investments. The total value of the insurance sector exceeded 1.800 billion, with a stable weight just under 40%, about 10 percentage points more than at the end of the XNUMXs. Great attention also continues to be paid to deposits, despite the low interest rates.
In the last five years, almost 200 billion of new resources have been set aside, bringing the total balance to exceed 1.400 billion and absorbing about 30% of total wealth. On the contrary, both public and private bonds have never attracted the interest of French households and today they have practically disappeared from the portfolio. The weight on total wealth has, in fact, fallen below 1,5%, as a result of a divestment process that has affected all the last few years.
Since the outbreak of the crisis, there has also been a move away from mutual funds, while equity investment has grown. Since 2009, French households have divested more than 50 billion of mutual funds, bringing the weight in the portfolio to below 7%, from over 10% in the early part of the 1.000s. The value of the shares, on the other hand, grew, stabilizing just above 90 billion, about a fifth of the total. The concentration in the sector of unlisted securities remains high, which in the last five years have benefited from the inflow of almost 820 billion, approaching XNUMX billion in total value, testifying also for French households constant attention to the small and medium-sized sector businesses.
Security and liquidity in German household wallets
In Germany, the value of household financial assets has grown steadily over the past eighteen years, with the sole exception of 2002 and 2008. As of September 2016, it exceeded 5.600 billion euros, 1.200 more than in 2007. A significant increase, made possible by a more favorable general economic situation, which has put families in a position to be able to set aside a growing share of savings. Between 1999 and 2008, in fact, on average almost 130 billion of new resources were invested each year in financial assets, while, between 2012 and 2016, it was close to 170 billion.
Portfolio composition has changed, signaling an increasing focus on safety and liquidity. Deposits remain the main tool, with nearly €400 billion of new resources invested over the past five years. The overall balance exceeded 2.200 billion, almost 40% of assets, about 4 percentage points more than in the mid-600s. Over time, the importance of pension and insurance products has grown considerably, with around 2.000 billion lire invested in the last eight years which have brought the total value to exceed 37 billion, with a weight on the total of around 10%, XNUMX percentage points higher than at the end of the XNUMXs.
German households, on the other hand, increasingly distanced themselves from both public and private bonds, with net disinvestments that, between 2009 and 2016, exceeded 110 billion. The share of the total has fallen below 3%, from 8% in the mid-2012s. In the last four years, however, investments in mutual funds have returned to growth. Since 100, families have allocated almost 570 billion euros of new resources. The total value of the investment reached 10 billion, just over XNUMX% of the total.
