Investire | January 2024

Taking stock of the past year and trying to predict what awaits us for the new year, it is inevitable to talk about managed savings and in particular about mutual investment funds and their future.

It is worth remembering that mutual investment funds have represented, since the early 1980s, the best form of democratization of investments: through them anyone could access a diversified investment, purchasing a share based on their availability.

In fact, in March 1983, law 77 came into being, establishing and regulating mutual investment funds. The first products invested mainly in monetary and bond securities, while shares did not exceed 15% of total managed assets and share funds represented just 1% of the entire stock market capitalisation.

Since then, it has been a succession of successes with the breakthrough of 2,000 billion AUM in 2017.

Today, forty years later, mutual funds seem to have entered a mid-life crisis. The outflows recorded in 2023 (around 40 billion equals to -1.7% on AUM), although largely contained compared to the horrible year 2008 (-25%), have slowed down.

The ability to generate value for subscribers will be fundamental to their recovery. The success of any product, whether financial or otherwise, is given by its ability to remunerate the entire chain of stakeholders: producer, distributor and – above all – the user, the final judge of its success or failure.

According to a recent study by the Bank of Italy based on an ESMA report, the annual costs of equity mutual funds in Europe are around 1.5% while for Italy this value rises to 2%.

In this context, the loss of position income can only be good for mutual funds and their managers, in a process of natural selection in which only the strongest and most capable will survive.

In this process, the so-called advanced consultancy will certainly have a leading role, if it is able to include and combine mutual investment funds with other solutions capable of remunerating the end customer.

In every market that has reached maturity, we move from the tailor-made solutions of the early days to an industrialized offer whose purpose is the search for the efficient frontier from at least two points of view.

The first point of view is the most noble one, so to speak, represented by Harry Markowits, who with his theory of the efficient portfolio revolutionized the approach to purchasing shares by giving primary importance to the relationship between risk and return.

According to the Nobel Prize winner, to compose an “efficient” portfolio, it is first necessary to identify a combination of securities capable of minimizing risk and maximizing return: the securities that make up a portfolio must be as little correlated as possible.

The second point of view, perhaps less noble, is that of the shopkeeper, who, when he sees the number of customers reducing, analyses the causes and finds solutions.

Combining the point of view of the shopkeeper with that of the Nobel Prize winner are two central aspects around which everything revolves: quality of the offer and price of the products.

There is no escape from the optimal relationship of this combination, unless you want to close up shop sooner or later.

Nicola Ronchetti