When we started, back in 2005, the objective of gathering Foundations and Social Security Investors to encourage knowledge, dialogue and joint analysis seemed very desirable, but not easy to achieve, and there was no guarantee of success.
Today, we can say this battle has been won, and we say it with great satisfaction, given our great and increasing commitment to the organisation of this event, by now a reference point in the Italian financial sector calendar.
In Santander, where in 2008 we held the 4th InFormation Course, there were almost 40 institutional investors attending. Responding to their requests, we decided to give them more time to analyse the issues and express their opinion in the discussion sessions and round tables.
With respect to past years a big difference was that we arrived to the usual appointment at the end of May worn out by almost a year of crisis in the financial system, probably the most serious since the advent of modern financial markets. The virus of the crisis, certainly helped by errors and excesses in the previous years, has in fact been able to penetrate the junctures on which the very existence of the markets depends: the trust between operators, the exchange of liquidity, the meaningfulness of market prices.Institutional investors could not be untouched by the crisis, even if certainly more protected than the mass of retail investors who are at the mercy of the business policies of financial intermediaries.
They have reacted rationally so far, taking significant advantage of the excellent remuneration now offered to liquidity, without panicking and questioning investment strategies at this point well-established, in the Management Bodies and in the daily operations of the Offices. Certainly, the “new harmonies” that we had proposed in the past, to enable the convergence of the “parallel perspectives” of investors and intermediaries “through absolute yields”, today have been replaced by a dystonia, if not a true cacophony. Absolute yield strategies have indeed been hit hardest in this crisis, with devastating consequences in some case: double-digit losses, suspension of the calculation of the NAV and closure of open funds, investors brought to despair by the asset managers themselves…
What went wrong? What lessons can and ought we to draw from the recent events?
This is what we discussed this year in Santander. The issue we focused on, “Alternative Investments: Core or Satellite?”, may seem similar to the one we discussed in 2007, but in fact aimed at encouraging the discussion on the different types of risk gradually added by financial innovation to the classic risk, market risk (volatility), at the basis of portfolio theory and of all the indicators used in risk management (VaR first of all).
Asset managers, therefore, must assess investment methodologies, processes and instruments, in order to restore the consistency between liquidity of investment vehicles for their underwriters and market liquidity of underlying assets.
Institutional investors instead are asked to make an effort to restore the consistency between the time horizon of their investment (the real one!) and the financial instrument used to achieve it, in order to avoid unnecessary anxiety when following the prices too closely and even some unpleasantness with different financial intermediaries and … advisers.
This special issue of Anteo includes a summary of the presentations, to give those who could not attend in person a chance to participate indirectly to the conference.