'Italy’s listed fund industry in need of restructuring'

Investors and fund managers are calling for changes to the structure of Italian listed property funds in order to make the vehicles more attractive.

Speaking at a conference on listed funds in Rome, Claudio Giannotti, head of research at fund manager Sorgente Group, said a number of elements penalise the quoted fund industry, which is currently trading at an average discount of 58% to net asset value.

‘These vehicles cannot finance themselves through bonds or rights issues which in itself represents a big disadvantage in today’s environment,’ Giannotti noted, adding that alternative funding has been growing steadily in the past years, reaching a total of €8 bn in 2012 alone.

Giannotti: 'Another problem is that there is very little activity at the level of fund units, meaning the market is not liquid enough and the values are very low.'

The industry, which comprises a total of 23 funds, has a market capitalisation of just over €2 bn, versus a total net asset value of €5 bn. The sector has been virtually frozen for the past six years, with no new fund launches since 2007.

‘We need a new series of funds,' Fabrizio Plateroti, director at Borsa Italiana, told attendees of the conference, organised by Italy's Sorgente in the ABI bank headquarters in Rome.

'These vehicles were created as closed-end structures and listing was introduced at a later stage to allow retail investors to participate in the industry. But trading goes against the same nature of a closed-end fund.’ The average volume of fund units traded in a single day is meaningless, he added.

Italy's listed industry accounts for as little as 0.2% of the property market, versus a European average of 3.8%, according to EPRA.