For ETFs, the Ftse Mib is too concentrated

For the Exchange Traded Fund (Etf), Piazza Affari is a very difficult terrain. Since the beginning of the financial crisis, the instruments that replicate the Ftse Mib index have averaged worse than the entire clbad of funds specializing on Italian stocks.

In other words, active management has done better from a point of view of risk-adjusted returns. "If we look at the last ten years, ETFs are in the bottom quartile," says Kenneth Lamont, a Morningstar badyst. "Only at three and five, the situation is slightly better". The Star rating, a synthetic indicator of the risk / return profile adjusted for costs, is actually two stars if we consider the total life of these replicants (in technical terms, we speak of overall score ). 19659002] The weight of large and banks
The main reason is the high concentration of the benchmark, the Ftse Mib, which includes the 40 largest capitalization shares of the Milan square: the five accounts for about half of the total and financial funds cover 35% of the portfolio. Eni, Enel, Intesa Sanpaolo and Unicredit each account for about 10%. General insurance follows with more than 5%

According to Morningstar badysts, it is difficult for an ETF of this type to do better than the category, which also includes active instruments, over a whole market cycle precisely because of overexposure to large capitalization companies and the financial sector. Unlike a replicant, in fact, a manager has more flexibility to look for opportunities among small and mid capitalization companies, which are outside the Ftse Mib. These were the protagonists of a strong rebound last year, after the launch of Individual Savings Plans (Pir), the "tax containers" aimed specifically to encourage investment in business middle of years 19459004 and 19459003.] small cap .

Competitive Commissions
The fact that ETFs are decidedly cheaper than active funds is not enough to guarantee them an advantage. This is why the only two ETFs currently covered by Morningstar's research (iShares Ftse Mib and Lyxor Ftse Mib) have a neutral and non-positive Analyst rating (Kenneth Lamont's report of June 25, 2018). ).

The Italian economy is too weak
"Italian large-cap stocks have not yet emerged totally recovered from the crisis, "explains Lamont. "Unlike other European indices such as the German Dax, the French CAC or the FTSE 100, the FTSE MIB is below 2007 levels. The main causes are economic weakness, resulting in high levels of unemployment and unemployment. Public debt, and the difficulties of the banking system.According to the International Monetary Fund, Italy will have to wait another decade to finally leave behind the current macroeconomic situation. "

Few & # 39; 39 Emerging
Another peculiarity of Italian blue chips, compared to Europeans, is the lack of exposure to emerging markets, especially China, which have high rates of economic growth. "Eni, Enel, Intesa Sanpaolo and Unicredit generate about two-thirds of revenues on the Old Continent and less than 15% in Asia," concludes Lamont.

See also: "Etf in comparison: Azionari Italia" by Valerio Baselli.

The badysis was conducted with the platform for financial professionals, Morningstar Direct . Click here to find out more about its features.