- When did Arca Fondi SGR SPA begin its journey & how has it been?
Arca Fondi SGR is one of the very first asset management companies born in Italy asit foundedin 1983, soon after the Italian Mutual Fund Law was approved. Our main shareholders have always been cooperative banks, and still today a group of them are the biggest distributors and shareholders. The company has steadily grown to more than €30bln AUM and has always proved to be one of the leading innovators in the Italian asset management market.
- The BREXIT situation has certainly impacted the Financial Industry. What challenges has it presented to you?
Brexit is a major disconnect which puts Europe in uncharted political territory. Uncertainty means that bouts of volatility might suddenly occur as negotiations unfold. Having said that, over the last ten years policy makers have being working hard to make financial markets more resilient and, moreover, they are now much more aware of the importance of being proactive in order to counterbalance a sudden drop in financial conditions.
- How do you intend to overcome the challenges?
Over the last years we have been working hard on integrating our portfolio construction and risk management processes which, ultimately, call for investments in technology supporting both investment management and comprehensive communication with our distributors and final clients. Diversification must be coupled with non-directional and protection strategies. Savers should be aware that investing means dedicating time to build portfolios matching their needs, risk aversion and time horizon; we are well set-up to provide solutions.
- What’s your view on the economy? What are the implications on the currency, equity and investment markets?
Global growth in 2017 will be higher in both nominal and real terms. That will continue to support risky assets in spite of the long-lasting rally that drove equities higher and spreads to rock bottom levels. The Eurozone, the UK and Japan will continue to carry forward their extraordinary monetary policy measures and that will negatively weigh on the appeal of Govies. The Federal Reserve will continue to normalize interest rates, with no need to be aggressive. In turn, the currencies of the emerging markets might continue to benefit, while the currencies of developed markets should remain range bound as governments are aware of the delicacy of using them as a policy tool.
- Tell us a little bit about Arca Fondi SGR SPA and what clients can expect when working with you?
Arca has been a leader in the Italian asset management market for 33 years, and over time it has developed effective solutions for both retail customers and for private banking advisers. Arca Fondi SGR has always been a leader in innovation too: the company was the first to offer target date funds since 2009 in Italy, which have a well-diversified portfolio and adopt two complementary strategies: fixed income duration management and flexible asset allocation in equities, with periodic distribution of dividends in the form of coupons. Arca is also famous for its flagship flexible allocation funds, with risk control, a multi-asset and global investment approach, being able to adapt to changing market situations. The maximum volatility in these funds is fixed and cannot be exceeded, therefore the fund manager always manages the risk budget and doesn’t let it pass a defined threshold, coherent with the clients expectations. We invest heavily in sophisticated fund management methods to be able to get these performances even nowadays when interest rates are near or below zero, as evidenced by the winning of numerous awards in the past few years. In the Pension Funds sector, Arca SGR manages the biggest open pension fund in Italy for assets under management at €3.3 billion (Source: IAMA – Data to March 30, 2016). Customers can expect from us solid solutions with a fair pricing structure and controlled risk, durable solutions of which customers can measure reliability and track record over the long term.
- What do you have to tell to customers who are sceptical about investing in Arca Fondi SGR SPA in the current conditions?
The more challenging the markets are, the more compelling is the case for seeking advice of a good asset manager and its advisors.We provide for example a wide range of target date funds with different level of volatility, suitable for the needs of most client profiles. Our flexible funds can change asset allocation very frequently and therefore adapt to rapidly changing market conditions as they have done in the past few years very well. Finally, Arca Fondi offers a lot of solutions and services that can make life easy even for novice investors like “Risparmia e Consolida”, an algorithm designed to double up the exposure when markets are relatively low and to take profit when markets are significantly above their historic average.
- What would you say are the most common mistakes investors make? What are some of the best trading practices to keep in mind?
Circumstances force Clients to act within a time frame that is constantly reducing , which means that they remain liquid for a longer period of time and that when they decide to enter the market the timing is wrong, which means that they invest or sell at the incorrect moment. Before looking at the return, it is necessary to plan the investment for the correct period of time and select the appropriate volatility level that the Client can handle. The best thing to do is to choose a good asset manager and a good financial consultant with excellent Client support services as it is the Customer Service that can really make the difference in difficult moments.
- What is Arca Fondi SGR SPA’s prediction on the Finance Market for the next 1 year?
Yields will remain very low and, more in general, returns will be the low single digits on a broad spectrum of asset classes. We do not seed negative rates going away any time soon: risk free rates are negative. The trade-off is between losing money with 100% probability and accepting a certain degree of risk to have a positive return over the whole investment horizon.
- What is Arca Fondi SGR SPA’s doing to build customers confidence in the Brand?
In our long history, we have never exceeded the risk mandates clients have given us, nor have we chosen to offer a product looking only at the short term business opportunity, instead of the clients interest. Our fees are among the lowest in the Italian asset management market. Finally, in the last five years Arca has been awarded a significant number of recognitions based on the superior risk/reward profile of our funds, from different Italian and international fund rating agencies.
- There are hundreds of Asset Management companies in the European market. What is Arca Fondi SGR SPA doing to stay ahead of the competition?
The total expenses of our funds are kept at low levels and this goes to the advantage of the clients. Moreover, we constantly invest in market technologies and have developed a wide range of yield enhancement strategies that can provide a return even in a low rates environment. Finally, our assistance and customer care services, both for distributors and final clients, are state of the art, mostly paperless and mobile if desired.
- What advice do you have for someone who is just starting to invest?
Start with a plan and gradually build the targeted asset allocation within few years, with a level of volatility coherent with age, experience and risk profile. Choose a good advisor and a strong asset management company in which you easily identify with
- Finally, can you update us about the latest developments in Arca Fondi SGR SPA?
We have just started offering one of the very first Italian “PianiIndividuali di Risparmio” (so called PIR) which are funds that are capital gain taxes exempt, provided the sums are kept invested by clients for at least 5 years. This is a new type of fund recently introduced in Italy and we believe they are going to revolutionize the asset management sector. The exemption is granted provided the fund invests most of its asset in stocks or bonds of Italian companies and at least 21% of AUM in mid or small sized companies. Arca Fondi has a very long experience in investing in Italian small and mid cap stocks: our specialized equity fund Arca EconomiaReale Equity Italia was launched two years ago investing in stocks of the FTSE ITALY STAR index which has overperformed the broad Italian FTSE MIB shares index in the last two years.
-Consulting Editor in Chief Mrs. Kyra James, Global Brands Magazine