FCSP fulfils and funds its mission with income from the management of its financial assets, which amounted to 7.2 billion euros, measured at market values as at 31 December 2019.
FCSP’s assets are managed according to the principles of diversifying financial risks, while conserving and increasing the real value of the portfolio in the long term. FCSP’s assets derive from the process of privatisation of the Turin-based bank Istituto Bancario San Paolo di Torino, which began in the 1990s.
Strategic diversification of investments
Initially, FCSP’s assets were invested entirely in the transferee bank, but as a result of a policy of diversification, they are now invested in a wide range of financial asset categories on international markets, including global listed shares, government and corporate bonds, private equity, venture capital, hedge funds and infrastructure.
Asset management is coordinated and monitored by an in-house FCSP team led by the Chief Financial Officer and organised by the Finance Department.
FCSP’s assets consist partly of direct investments. These include equity investments in institutions such as Banca d’Italia and Cassa Depositi e Prestiti (the state-owned financial institution managing savings collected by the Italian Postal Service Bank), mission-related investments and the equity investment in the transferee bank, which accounts for about a third of the market value of FCSP’s total portfolio. Secondly, they consist of investments in funds managed by third-party asset managers, which make up the diversified international portfolio.
The funds managed by third-party asset managers are mainly held in two funds of funds, one for liquid assets and one for illiquid assets, managed by Fondaco SGR, an asset management company in which FCSP holds a 38% stake.
Portfolio risk is controlled mainly by diversifying investments by sector, geographical area and issuer, and by carefully assessing the cash requirements of FCSP’s institutional activities, which are met by the revenues generated from asset management. Investment diversification is ensured by establishing a strategic asset allocation. Formulated with the aid of a specialist advisor and reviewed every three years, this allocation specifies the proportions of the various asset classes in the diversified portfolio, taking account of the composition and income capacity of the strategic investments.
The investment process is governed by FCSP’s governing documents, such as its Constitution, the Regulations Governing Asset Management Methods and Criteria and the corresponding Implementing Document, approved by FCSP’s General Council.
An Investment Committee, made up of members of the Management Board and external experts, is tasked with supporting the Management Board and submitting opinions to it.