As the list of top international funds houses in Milan grows longer, so the local management landscape is changing.
This plays to Neuberger Berman strengths, says Barbieri: “As part of our investment capabilities, we offer strategies that are unconstrained and have the ability to take bets against benchmarks to preserve capital.”
The second pillar pension market is still small, standing at about €85bn, but displaying healthy growth.
Most of the second pillar pension market is DC and shares some similarities to the top-end retail market of the funds of funds, multi-manager and private banking segments, as they also seek total returns.
Last year brought €2.2bn in net sales for Schroders, the highest level of net new business since launching in Italy, says Tenani.
This year looks set to repeat a good performance, having garnered €900m in the first half, not far off last year’s record.
He adds that this is due to the usual factors, such as strong investment performance and a strong range of products. But more important, he says, is spotting client demand.
At the moment, client demand is focused on income distribution. Schroders’ strategy for the Italian market is to offer eight fixed income funds and two equity funds, all with a distribution share class.
The strategy paid off when the government, in its July budget announced an extra tax on those directly holding stocks and corporate bonds.
Dik Van Lomwel, managing director of Neuberger Berman and head of Europe and Middle East, says its active management style is its strength:
“We focus on where we can make a difference. Our clients are selecting us for our judgement and conviction.” Its Global Thematic Opportunity Fund has an active share of 97.5%. Its best-selling fund across Europe is the Ucits IV-compliant NB US High Yield Bond Fund.
Tenani notes a strong appetite for total return products. “It is a different climate now, and investors are delegating more to fund managers,” he says. Currently, Schroder’s top-selling product is the ISF Strategic Bond fund, a flexible fund that invests in securities issued by governments, government agencies and other supranational or corporate issuers, primarily in the US (63%).
Also popular among investors in Italy are flexible funds that can change allocation between growth and defensive assets according to market conditions.
To meet this post-crisis demand, Schroders in 2009 launched its STS Global Dynamic Balanced Fund, designed to tap rising markets while protecting against potential downside.
Looking ahead, Tenani believes their Global Emerging Markets Opportunities Fund could become a top-selling fund if, as he suggests, emerging markets equities become an asset class of increasing interest to investors looking for a safe haven for their assets. He says: “This fund will be for the next roadshow, along with our global thematic funds.”
Tenani is confident about the prospects for Schroders in Italy: “We are a big player in a market with high barriers to entry, so we benefit from first mover advantage. Local managers will continue losing business to international funds houses.”
Furthermore, there is the expectation that the big banking groups, which control all the biggest distribution networks in the country, will increasingly adopt open architecture. He says: “This will provide a great boost to our business.”