Asset management companies (AMCs) are financial intermediation institutions authorised to promote and conduct collective investment services. Along with investment companies with variable capital (ICVCs) and investment companies with fixed capital (ICFCs), AMCs are the only entities legally authorised to manage collective investment funds to invest savers’ money in financial activities as a single equity fund.
Collective investments are managed by UCIs (Undertakings for Collective Investments), while individual investment portfolios can be also be managed by banks and securities brokerage firms.
But collective investment management is not the only service AMCs offer. They can also:
- offer portfolio management services on an individual basis on behalf of third parties;
- establish and manage pension funds;
- provide accessory services, such as the custody and administration of financial instruments and associated services;
- provide investment consultancy services;
- sell shares or equity securities in UCIs managed by third parties (in line with the rules of conduct established by CONSOB in collaboration with the Bank of Italy);
- provide order receipt and transmission services when authorised to manage alternative investment funds such as hedge funds, private equity funds and venture capital funds.
The Italian Association of Asset Management Companies is Assogestioni, which offers advice and technical support to its members, engaging with sector operators and institutions. It represents the main AMCs operating in Italy and is a member of the European Funds and Asset Management Association (EFAMA).
How did asset management companies come into being?
What is the history of AMCs? Asset management companies were created in 1998 with the Consolidated Law on Financial Intermediation. Art. 34 of this regulation governs the requirements that authorise AMCs to provide collective investment and portfolio management services as well as investment consultancy and order transmission and receipt services.
To be allowed to operate, an AMC must meet certain criteria:
- the company must be incorporated as società per azioni (S.p.A.);
- the registered office and general headquarters must be in Italy;
- the share capital cannot be less than the amount established by the Bank of Italy;
- anyone conducting administrative, management or control functions must be suitable for the role;
- the structure of the group to which the company belongs cannot detract from the effective supervision of the company;
- the certificate of incorporation and the articles of association must be accompanied by a plan of initial activities and a report on the organisational structure;
- the name of the company must contain the words “società di gestione del risparmio” (asset management company).
The minimum share capital of an AMC must be one million euros (unless in the case of certain exceptions that provide for a lower value).
The legislative framework
The activities carried out by asset management companies are regulated and monitored by the Bank of Italy, CONSOB, and the Italian Ministry of the Economy and Finance. Bankitalia is responsible for managing the risk, the brokers and the financial stability, while CONSOB is responsible for transparency and conduct.
At European level, AMCs are regulated by two Directives:
- Directive 2009/65/EC “Undertakings for collective investment in transferable securities” (UCITs, in Italian Organismi di Investimento Collettivo in Valori Mobiliari – OICVM);
- Directive 2011/61/EU which concentrates on “Alternative investment fund managers (AIFM)” – all those that do not qualify as UCITSs.
There is also another group of directives, regulations, delegated acts and guidelines that contribute to the legislative framework on AMCs. In Italy, the sector is governed by the Consolidated Law on Financial Intermediation, by several decrees, and by the provisions issued by the Bank of Italy and CONSOB. The law also grants supervisory authorities the same powers of regulation, information, inspection, intervention and sanctioning provided to banks and securities brokerage firms.
The authorisation procedure
An AMC that wishes to provide collective investment services must produce a plan that sets out the corporate activities, objectives, strategies and any other element necessary for evaluating the initiative. This plan is submitted along with a report on the organisational structure. Both documents must include certain basic information on the activities, services and products, the organisational structure and the investments, and the expected development of activities, the financial and economic position, and any specific provisions concerning existing companies.
The Bank of Italy evaluates the plan of activities and the organisational structure and may request changes if necessary. The initiative must be able to guarantee the effective management of the risks associated with the stated activity, the technical and human resources required, and a sound organisational structure.
Company representatives must meet the requirements of professionalism, integrity and independence. Sound business relations, financial situation and the existence of links of any kind with other parties able to influence the management of the company are also taken into account to evaluate shareholder suitability.
Etica Funds, the ethical asset management company
Etica Funds was established with the aim of directing the financial investments of households and businesses towards more socially and environmentally conscious businesses and governments.
In the pursuit of its corporate mission and when managing relations with all of its stakeholders, Etica Funds strives to be economically effective and efficient while also being responsible and conscious of environmental, social and governance factors.
- Etica Funds promotes financial investments in securities of issuers that distinguish themselves for their focus on the social and environmental impact of their actions (Etica System).
- Etica Funds actively participates, also by delegating other parties, in the shareholders’ meetings of the businesses in which it invests and exercises the voting rights associated with the shares in the portfolio (Active Ownership).
- All subscribers to the funds of Etica Funds are invited to make a voluntary donation of one euro in every thousand euros to support microfinance and crowdfunding initiatives in Italy.
- Etica Funds aims to represent the values of ethical finance on the financial markets and to raise public awareness on socially responsible investments and corporate social responsibility (ESG Consultancy).