Pir available only as an ETF to provide a lifeline for SMEs
To date, the approximately 20 billion euros managed by ordinary PIRs have been siphoned off by the major banks
Why not allow investment firms to offer PIR-compliant products – with the associated tax benefits – exclusively in the form of ETFs? And no longer as mutual funds, insurance policies or other financial solutions. This is not meant to be provocative, but rather a proposal worth considering for several reasons. The first relates to the original objective of PIRs, instruments devised in 2017 to channel household savings towards supporting the growth and development of Italian SMEs. Over time, however, the lax portfolio requirements – necessary to qualify for the tax benefits – have left fund managers with considerable discretion to allocate only a residual portion of the assets of PIR-compliant mutual funds to SMEs. In this context, ETF-based PIRs could represent a turning point. Let’s find out why.
To date, the approximately 20 billion euros managed by ordinary PIRs have been siphoned off by the major companies, mainly large banks, listed on the Milan Stock Exchange. Smaller listed companies have been left with mere crumbs. Indeed, one need only scan the holdings in PIR fund portfolios to discover that the scene is dominated by bank shares and bonds, with the occasional appearance of other major listed companies such as Enel and Eni. Spotting a few small-cap companies is an exercise that requires a great deal of patience. In particular, PIR equity funds channel a minimal flow of resources to companies traded on the EGM market – which is dedicated to firms with high growth potential – amounting to less than 1 per cent of their assets. And with PIR bond funds, the situation is even worse.
ETFs, on the other hand, could mark a change of pace. Take the Investlinx Intermonte Valore Italia Active PIR ETF, launched this week under the auspices of Banca Generali. Despite the discretion afforded by an actively managed product, it cannot invest in banks or other major listed companies. The fund manager can only select shares from the 100 companies with a market capitalisation of up to one billion euros included in the underlying index, half of which are traded on the EGM. Thanks to the rigorous structure and transparency that characterise ETFs, all the capital that this new product is able to attract will be channelled into businesses within the national manufacturing sector. SMEs will not be left with mere crumbs.
The other long-standing PIR ETF listed on the Milan Stock Exchange, managed by Amundi (formerly Lyxor), also simply tracks an index – in this case, one that is weighted more heavily towards mid-cap than small-cap companies – from which it cannot deviate in any event.
If, therefore, the relaunch of PIRs announced by the Meloni Government were to go ahead, it would be advisable to tighten the portfolio requirements and allow only ETFs to be classified as PIRs, because even actively managed ETFs adhere to precise rules that offer greater certainty.
