Labour consultants: the fund’s returns are being held back by the weight of bonds

With a return of 3.87% and assets under management of €1.8 billion, Enpacl ended 2025 on a positive note. The target set by the Pension Fund for Labour Consultants, at 3.70%, was exceeded by 17 basis points. This is a significant result in terms of sustainability: it means that the pension fund has generated sufficient returns to cover future commitments to its members. However, the 2025 financial statements also tell another story. The benchmark returned 5.28 per cent: the 141-basis-point spread theoretically equates to over €25 million less in returns compared to the benchmark. The fund itself acknowledges this in the financial statements, without, however, providing an in-depth analysis of the causes.

One possible explanation for the gap between the portfolio and the benchmark lies in the portfolio’s structure, which is built on a defensive strategy: 40.6% is invested in bonds, the main asset class. Such a structure naturally tends to dampen volatility, but also limits participation in bull markets. 2025, at least for the financial markets, was a favourable year. The limited weighting of equities and the overweighting of government bonds may help to explain the gap relative to the benchmark.

Similarly, the property component — accounting for almost a sixth of the portfolio — offers stability and protection against inflation, but is unlikely to drive performance in years when financial markets are booming.

It must be recognised that a pension fund is not a hedge fund. The objective is not to maximise returns at any cost, but to ensure the long-term sustainability of pension commitments. From this perspective, a substantial bond holding ensures predictable cash flows and risk mitigation. But the question left open by the financial statements is whether the current level of prudence is still correctly calibrated in relation to the institution’s long-term profile.

One of the aspects that warrants particular attention is the portfolio’s geographical distribution. 49.9% of the assets are invested in Italia: in absolute terms, this amounts to around €900 million, rising to over half the total if cash holdings are excluded. “For an institutional investor of this size,” explains Vincenzo Cagnetta, an analyst and independent financial adviser at Studio Enca, “domestic exposure exceeding 50% of the actual investment represents a significant concentration. It is not an extreme risk — the Italian exposure includes government bonds, property and investments linked to the domestic economy — but it significantly reduces the benefits of international diversification and increases the correlation between the soundness of the pension assets and the fortunes of the Italian economy.”