DAVID KARNI
HEAD OF PORTFOLIO MANAGEMENT
BCC RISPARMIO & PREVIDENZA
Score prediction: ITALY 3 – AUSTRIA 1
INVESTMENT INSIGHT:
Last Tuesday we had the official approval of the first round of the Next Generation EU for Italy.
In the last couple of months the country became more appealing to the counterparties in the European Commission, thanks to the presence of Mario Draghi as prime minister. The Recovery Plan presented by Italy was successfully approved and will start next July.
The forecast for the Italian GDP will be among the strongest compared with all of the eurozone, following the latest reviews. One last thing to mention is the evolution of the vaccine campaign, in which Italy has improved – achieving a pace of more than 500,000 vaccines per day.
In summary it seems that it’s now the time to look again to invest in Italy.
If we look at the fixed income space, Italian BTPs give a yield bigger than the other eurozone countries (ES: 10yr 0.88 vs Spain 0.44, Portugal 0.43, Greece 0.81),and if it’s true that Italy has a huge amount of debt, it‘s also in the right direction of reduction. I think we can expect in few quarters a relative reduction of spread with respect to the others.
If we look at the yield of financial bonds we can find a premium even in the national champions. The financial system in Italy is crucial to transmit the funds from the european plan and it’s important that the health of the banking system is improving, reducing the non performing loans at minimum of the last 10 years. The block of dividend imposed by ECB helped to improve the ratios and now the financial system is ready to do the job, both from the financial and real economy.
ALBERT REITER
CHIEF EXECUTIVE
INVESTRFP.COM and INVESTESG.EU
Score prediction: ITALY 0 – AUSTRIA 1
INVESTMENT INSIGHT:
The Austrian team was very pleased to advance to the round of 16 where they will face one of the top nations in football – the Squadra Azzurra of Italy.
Not only has Italy won major Euro and World Cup titles in the past but they are breaking records these days also: 30 games unbeaten, 11 consecutive wins without even conceding a goal.
The odds are against Austria but why not raise with the challenge and win. I expect Austria to win 1:0.
From an investment perspective, we can take a look at actively managed Austrian equity and Italian equity funds which are registered for distribution in Austria.
Over the first five months of this year the best active Austrian equity fund, 3 Banken Österreich Fonds, was up by 22.99%* and the best Italian equity country fund, Fidelity Funds – Italy Fund, gained 19.99% over the same period.
The performance range of the top five Austrian funds was from 17% up to 22.99% and the top five Italian equity funds ranged between 14.88% and 19.99%.
Italian equity investment funds can demonstrate a long track record. The Fidelity Italy fund was launched more than 30 years ago. Some Austrian equity funds have been around for even longer. The ERSTE STOCK VIENNA was launched 35 years ago.
In both countries investors can select from a range of funds to implement the country allocation. Index funds (iShares, x-trackers) are very competitive in terms of costs and performance in these two asset classes.
*Data Sources: e-fundresearch.com / Morningstar
