Sandro Pierri - Pioneer Investments

We have just approved our 5-year strategic plan, based on three concrete actions. First, geographic expansion in high-growth areas, particularly in Asia, where we have localized initiatives to consolidate our successes, especially in Taiwan, the opening in Korea, and a general strengthening of institutional activity in Asia. Latin America is also important, and we are working to enter Mexico. Second, on products and investment capabilities, we want to strengthen certain asset classes. We have announced the creation of an Emerging Market hub in London concentrating equity and fixed income emerging market activities. We are developing Global IFA (international equities for US investors) in Boston, and we are focusing on high-dividend equity investments, as we believe dividends will be a significant component of future returns. Third, rationalization of existing structure to achieve a competitive cost structure: we are exiting the Russian market, which is marginal for us, and we will rationalize infrastructure activities, especially in IT. That in a nutshell is our industrial plan.

First of all, Italy is very important for us. Although we are now an international player, Italy remains a very important market, currently about 50% of our business, so it's fundamental. Unfortunately, Italy has seen a progressive decline in the asset management industry in recent years. The last year was not brilliant either, but this must be seen in a broader European context: almost all European markets have suffered. It's a combination of increased risk aversion due to successive crises, and pressure on financial intermediaries to favor funding products over managed savings. However, we believe that in Europe and Italy, recent events—the ECB's indirect injection of liquidity and the recovery of confidence, especially after the Monti government, with spreads narrowing—will lead to a normalization. So we think that Italy will normalize over the next two years compared to the difficult levels of recent years.

I would say in Europe it is quite a common theme. We have seen it especially in France, where the market recorded significant flows almost all concentrated in low-risk monetary products. Also in other continental European countries, including Germany, the trend is not very different. So Italy has accentuated some phenomena, but the tendency is quite general. The situation is different for Asia, the United States, and Latin America: the US is a much more evolved market with a more established culture of risky investment, while Asia and Latin America are fast-growing markets where we have seen a significant recovery in the last two to three years.

Yes, I would say that the crises of 2008 and 2011 have certainly led to a rethinking of the concept of risk-free. It is clear that the concept of risk-free as sovereign bonds will be tested multiple times in the future. So I think it is important to reflect on which products can work for clients, especially in light of what we started seeing in 2011. Looking at 2011, the two categories that generally saw positive net inflows in Europe were diversified fixed income funds, which we define as unconstrained, with great manager flexibility to allocate among various fixed income components, and the other sector was Absolute Return funds. These two observations indicate that the redefinition of risk-free passes through a rethinking of product policy, where unconstrained and Absolute Return products will become core parts of most clients' portfolios, albeit with a different perceived risk level.

We have a fairly diversified mix of channels. We work both with the channels of the Unicredit group, which is our sole shareholder, and with institutional clients and third-party networks. The open architecture phenomenon is also taking hold in Italy, and being able to work with promoters and private banking networks is one of our main focuses. We are also strengthening our sales team in this direction, so this is an area of great attention for us this year and as part of the plan.