Credit Suisse wins Italian SRI funds brief

Mandate set to grow as workers increase contributions.

Credit Suisse Asset Management (CSAM) has won the mandate to run an initial €20m global balanced ethical portfolio for Laborfonds, the €451m ($619m) defined contribution pension fund for workers in the Italian region of Trentino-South Tyrol.
The mandate size is expected to rise rapidly as a result of new member contributions from Laborfonds’ 83,000 members who can choose from four fund options for their pension investments.
CSAM was selected from a long-list of 15 SRI managers, which was reduced to a shortlist of six by Pensplan, the fund’s consultant.
Laborfonds has set up a working group on socially responsible investment to sit alongside its investment committee. The fund has limited equity investment in the €20m ethical portfolio to 25% with the remainder likely to be invested in bonds. As well as the ethical fund option, Laborfonds members can choose from two balanced funds that mix equity, bonds and cash investments, and a guaranteed income fund.
A rise in ethical assets at Laborfonds would indicate that growing numbers of Italian workers are choosing responsible investment portfolios for their retirementassets. Italians were recently allowed to start investing an expected pot of billions of euros into pension plans rather than keeping it in traditional severance pay accounts known as the TFR (trattamento fine rapporto). The TFR is estimated to be the equivalent of 6.7% of Italian salaries and could amount to an annual flow of €13bn into private pension schemes if all workers decide to take up the pensions option. Pension funds providing TFR funds have to guarantee a 3.1% minimum annual return on invested money.
Angelo Mutinelli, a consultant with Pensplan said the ethical mandate would focus positively on companies with good sustainability, development, human rights, corporate governance and environmental policies, but exclude investment in arms or related industries. Mutinelli said: “We are seeing a lot of interest in ethical funds in Italy and we think they will grow quickly.”
Italian employees can currently invest for retirement through either company specific pension funds, known as closed-end plans, or open-ended mutual fund arrangements.
In July this year, the Italian government said it would raise the statutory retirement age from 57 to 60 years as of 2008.
Click here for RI mandatewatch 2:10:07.pdf