PIR Monitor (September 2020)
Conservative approach still weighing on the new PIR flows
Traditional PIR funds (3.0) returned to slightly positive net inflows in 2Q20 (€+58.7mn) vs. outflows in 1Q20 and 4Q19, thus bringing the balance YTD to about € -200mn.
However, net inflows are still lacklustre because of a very conservative approach in investment decisions by retail customers due to the uncertainty caused by Covid-19, in our opinion. We expect a return to positive net inflows for the traditional PIRs in the second half of the year when the distribution networks will once again intensify their commercial efforts on the product, as the new PIR (3.0) system, in force since January 2020, is effective for its relaunch. As for the new Alternative PIRs, the August decree (pending conversion into law) has strengthened the appeal of the instrument, raising the annual tax-free investment threshold per person from € 150k to € 300k per year.
Given the magnitude of inflows expected from the new Alternative PIRs and the focus on SMEs (>70% of AUM not in FTSE MIB and FTSE MID stocks), we think it is crucial for the Government to continue to support the listing of SMEs and the access to the Capital Market, in order to better match supply and demand.
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