News & Announcements

Only 18% of European citizens possess a high level of financial literacy, while another 18% ranks at the low end of the scale. This is why Europe is calling for greater literacy, to reduce the risks of financial exclusion. 

To improve a general understanding of financial products and be able to make financial decisions on the basis of adequate information: this is the purpose of financial education, a process that enables anyone to acquire the necessary skills and know-how to make informed decisions with a major impact on their lives.

It is not so much a matter of learning how to build an investment portfolio, as of making asset allocation choices that are consistent with one's needs and goals.

When is it good to start saving for retirement? Is it better to keep one's savings as liquidity or invest them in financial assets? How can one learn to understand market trends? These are some of the questions that everyone should be able to answer with a good level of financial literacy. However, surveys show us that all this is still a long way off. 

Financial knowledge is still low among most Europeans

The Eurobarometer survey published in July 2023^[1] by the European Commission shows that only 18% of EU citizens have a high level of financial literacy, 64% a medium level, and the remaining 18% a low level.

Only in the Netherlands, Sweden, Denmark and Slovenia do more than 25% of people score highly in financial literacy. For example, around 35% of respondents do not comprehend the impact of inflation and its potential consequences on purchasing power, while only 45% understand how compound interest works, despite the importance of this concept for managing personal finance and achieving long-term saving goals. Moreover, more than 40% of respondents are unable to correctly associate higher returns with greater risks.

Therefore, it is not surprising that, according to the Eurobarometer survey, 18% of respondents only have three months’ savings with which to continue covering their living expenses, without borrowing any money or moving house, in the event of losing their main source of income, while 16% state that they do not have any emergency savings at all.

According to the European Commission, these results point to the need for financial education to target in particular women, younger people, people with lower income and with a lower level of general education, who tend to be on average less financially literate than other groups.

Financial literacy: why it is important

In the Capital Markets Union 2020 Action Plan^[2], the European Commission had already stated that “sound financial literacy is at the heart of people's financial well-being”. As a result, several initiatives have been developed, including the Retail Investment Strategy^[2] adopted in May 2023 with the aim of providing non-institutional and non-professional investors with the tools to make decisions that are aligned with their needs and preferences, enhancing trust and confidence, so that everyone can take full advantage of the opportunities offered by the financial markets.

Some countries are trying to bridge the gap: in Italy, for example, a 2017 law identifies financial literacy as a subject to be studied also in schools. The law was enacted in the wake of the major financial crises of 2008 and 2012 (caused by sub-prime mortgages), which showed how a lack of understanding of financial dynamics can lead to crises on a global scale.

It will take time to see the results of such initiatives as the process of knowledge consolidation needs to be strengthened, but COVID has already shown that, at critical times, those with greater knowledge – or at least the support of an advisor (generally consulted by those with better financial literacy) – are better able to withstand the shocks that may occur in the world economy.

However, it is not just a matter of avoiding mistakes, but also of seizing financial opportunities. Indeed, low levels of financial literacy can mean being excluded from or having poor accessibility to efficient asset management solutions at a time when the welfare state is becoming increasingly less generous.

We need only think of what is happening on the social security front: due to a number of factors – including the so-called imbalance caused by the ‘demographic winter’, which favours pensioners over workers – social security systems are having to raise the retirement age and provide retirement benefits closely linked to the contributions paid in order to ensure their sustainability.

This means that workers whose careers have been characterised by discontinuous employment will have to make do with rather underwhelming retirement benefits.

Having the skills to supplement one's pension earlier on in life should be a guarantee of the financial well-being of the beneficiary, but also of greater equality within society.

^[1] https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/capital-markets-union/capital-markets-union-2020-action-plan_en

^[2] https://finance.ec.europa.eu/publications/retail-investment-strategy_en

^[3] https://finance.ec.europa.eu/news/eurobarometer-survey-reveals-low-levels-financial-literacy-across-eu-2023-07-18_en#:~:text=The%20survey%20tested%20both%20the,18%25%20%2D%20a%20low%20level.

The considerable challenges posed by the environment and innovation are opening up new horizons for the real economy, which is becoming one of the assets to be taken into account when diversifying an investment portfolio. 

In recent years, an awareness of the consequences of climate change, the opportunities offered by technology, and the need to reduce social inequalities further exacerbated by COVID have led Europe to implement sustainable development strategies that are thoroughly transforming our economic system.

The goal, for example, of obtaining zero carbon emissions by 2050 so as to curb the rise in global temperatures has triggered a profound transformation that affects not only consumption, but above all the way we produce. Applying the principle of circular economy, for example, means reviewing product design in order to reduce waste or rethinking production lines so that secondary raw materials can be reused and end-of-life materials recovered. It also means transitioning energy sources from carbon to renewables.

This historic change, ushering in a new renaissance of the European economy, also opens up new opportunities for growth and, consequently, new prospects for investors wishing to diversify their portfolios.

The importance of diversification: why the real economy should be regarded as an opportunity

Diversifying investments means distributing available resources among different asset classes and economic sectors to reduce exposure to the specific risk of a particular company or sector.

This concept was summed up effectively by Warren Buffett, one of the most successful investors of all time, in his maxim: ‘Do not put all your eggs in one basket’. In other words, invest all your capital in one stock or sector and you will expose your portfolio to significant risk: if that particular investment experiences difficulties or declines, the entire portfolio will suffer. Diversification, on the other hand, means allocating capital in a balanced way among different asset classes, such as stocks, bonds, real estate, commodities, and so on.

This strategy helps to reduce the overall risk in your portfolio, given that negative variations in one area can be offset by positive returns in others.

The real economy, i.e. the set of businesses that produce goods and services and distribute them on the market, is one of the categories towards which capital can be directed in order to offset the volatility of the financial markets, as companies that produce concrete products and services tend to be less susceptible to sudden fluctuations.

The significant evolution currently experienced by the real economy as a result of the ongoing transitions is opening up new growth opportunities for companies and, consequently, for investors.

The European Green Deal, which aims to make the EU climate-neutral by 2050, seeks to boost the economy through green technologies, create sustainable industries and transport, and reduce pollution. To achieve the targets set, the Commission has undertaken to mobilise at least EUR 1 trillion in investments^[1]. The same applies to digitalisation, to which Europe has allocated EUR 1.3 billion^[2] with the Digital Europe programme.

The road ahead is fraught with unknown variables: these transitions mean that some companies, closely linked to the 'old' way of producing, will have to undergo huge changes to reshape their business system. However, having set such important goals and resources has laid the foundations for a new renaissance of the real economy, which has started in Europe but is destined to expand, in the long term, to all other major international markets, from the Americas to Asia.

Why governments incentivise investment in the real economy: the case of the ISPs

This path towards a modern, resource-efficient and competitive economy also opens up new opportunities for investors, who can make use of instruments linked to unlisted companies in order to grow.

In some European countries, governments have long been providing tax benefits to actively encourage investments in the real economy. In Italy, this has been achieved with Individual Savings Plans (ISPs), set up in the wake of similar instruments also available in other countries (see France’s PEAs and Britain’s Individual Saving Accounts).

In their different ways, these instruments are all rooted in a desire to bring private savings, often held in the form of liquidity (with virtually no returns and exposed to erosion by inflation) in contact with business investments, especially those of small and medium-sized companies which do not normally access the financial markets and therefore do not avail of capital to finance innovation, research, and, ultimately, growth.

This is why in principle these plans offer significant tax advantages. ISPs, for example, offer tax exemption on capital gains and dividends, provided the investments are held for at least five years. This requirement is useful both to the investor, to obtain medium-to-long-term benefits, and to the recipient of the investment, as five years are a sufficient period of time in which to set up, develop and consolidate the results of a project conceived to make a company grow.

Moreover, in addition to tax benefits, these instruments provide access to opportunities from the real economy, also driven by the ongoing transitions. COVID, for example, has shown that the most sustainable and innovative companies are also those most resistant to crises: investing in SMEs or in companies with ongoing digitalisation processes and committed to sustainability means being able to count on essentially stable assets. 

From this perspective, diversifying your portfolio by investing in the real economy is a strategy worth taking into consideration - based on your risk profile and with the support of an advisor - if you wish to seize emerging opportunities and offset volatility.

^[1] https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/finance-and-green-deal_it

^[2] https://digital-strategy.ec.europa.eu/it/news/eu13-billion-digital-europe-programme-europes-digital-transition-and-cybersecurity

In the first six months of the year, inflows for investments in fixed-income securities registered record growth. Investors mainly chose government and corporate investments to diversify their portfolios. What will happen until the end of the year?

2023 continues to see investors favoring bonds, continuing a trend that had already been identified since late 2022.

After the positive figures of the first quarter, the second quarter also confirmed an extremely positive trend. According to data published by Morningstar on ETF (Exchange Traded Fund) flows (data updated in June), European investors preferred those into bonds. These reached EUR 15.9 billion, up from EUR 15.1 billion in the previous quarter. By contrast, equity strategies recorded inflows of EUR 12.7 billion in the same period, 42% less than in the year's first three months.

ETFs do not cover all the bond market, but they indicate what is happening in it. In Italy, for example, Assoreti pointed out that in asset management, for the first six months of the year, government bonds and corporate bonds remained the preferred investment choices^[1]: EUR 4.3 billion net inflows in June for government bonds, EUR 1.3 billion for corporate bonds, while the balance of movements in equities was negative (EUR -314 million).

But what is the reason for this interest in fixed-income securities emerging at the European level?

The rise in interest rates marks a turning point for bonds

Bonds are debt instruments that entitle holders to receive a predetermined stream of payments, which include the repayment of the principal and the payment of the interest. They are therefore fixed-income securities because the promised remuneration is predefined in terms of amount and schedule, unlike equities, which depend on the issuer's profitability.

They are therefore useful tools for optimizing investment portfolios and balancing risk and yield.

In past years, interest in bonds, especially government bonds, has been discouraged by their low yields. In recent months, however, the rise in interest rates has been a turning point, because it has led to higher yields on the safest assets in the bond market, such as government bonds, thus making them more attractive to investors.

In fact, at a time of great volatility in equities, flows have turned to bonds, in the form of government and corporate bonds or bond ETFs, which reached an all-time high in the first half of 2023 as investors rebalanced their portfolios, benefiting from rising yields.

What will happen in the rest of 2023?

Investments and prospects: Diversification is the key

While bonds benefit from rising interest rates in terms of yield, their main ‘enemy’ is inflation, as rising prices erode the purchasing power of fixed incomes, which do not have the same pace of inflationary growth.

Take, for example, pensions, which are synonymous with fixed incomes and remain unchanged: if prices rise, purchasing power is gradually eroded.

However, in Europe, but also the US, inflation is slowing down, thus also reducing the impact on bond investments, while observers expect interest rates set by Central Banks to peak in the coming months. Also in the second half of 2023, favorable conditions could therefore be created for flows into bonds, replicating the results of the first half of the year.

It should always be recalled, however, that an investment portfolio should not be constructed based on sentiment or market trends, but in the light of one’s own risk profile and expectations. In this decision-making process, which should be assessed on a case-by-case basis, including with the support of a financial advisor, it is always useful to remember that diversification is the main strategy that helps to spread risks and balance yields, according to one’s objectives.

Diversifying between bonds and equities, and choosing assets from different sectors, latitudes, and currencies remains crucial to efficiently manage one’s investment package.

^[1] https://assoreti.it/wp-content/uploads/2023/07/Comunicato_flussi_giugno2023.pdf

In June 2023, the European Commission presented a new package of measures to strengthen the regulatory framework for sustainable finance. Meanwhile, after Europe, other states worldwide are working to define a “vocabulary” to facilitate sustainable investments.

Sustainability has long been at the heart of the European Union policies, which has set itself ambitious but necessary climate and energy targets to try to contain the rise in temperatures that are driving ongoing climate change.

In particular, Europe has pointed to the need for a transition to a low-carbon and resource-efficient economy as the only possible way forward. This would act as a kind of new “industrial revolution”, which may also have positive impacts on the economy, innovation, employment, and on global competitiveness.

In order to make this paradigm shift, however, a lot of investment is needed. This is because it would cost around 180 billion euro per year^[1] to reduce greenhouse gas emissions by 40 percent, make the EU climate-neutral by 2050 and meet the 2030 targets of the Paris Agreement.

For this reason, the financial world has assumed a central role in the transition process. Still, in order to efficiently channel investments and optimize results from an ESG perspective, Europe has found it necessary to fill a gap, namely the absence of a standard and shared framework defining what is genuinely sustainable. In the past few years, this shortcoming has meant a proliferation of very different approaches and valuation methodologies, resulting in dissimilar analyses that are often not comparable even for the investors themselves. This was the starting point for the European Taxonomy^[2], namely building a common language of sustainable investments,

The Taxonomy Process: the latest news

As things stand, Europe has approved two of the six delegated acts that set out criteria for identifying activities and efforts which contribute to climate change mitigation and adaptation and can therefore collectively be considered as activities genuinely worth investing in according to ESG criteria.

The process, however, further developed in June when the European Commission presented a new package of measures to strengthen the EU framework on sustainable finance^[3].

In particular, the list of activities included in the manufacturing and transport sectors, which were previously not covered, has been expanded, broadening the scope of economic activities contributing to climate change mitigation and adaptation. According to the Commission, “the inclusion of more economic activities covering all six environmental objectives, and consequently more economic sectors and enterprises, will increase the usability and potential of the EU Taxonomy in increasing sustainable investments in the EU”.

The main news item in June, however, was the approval of a new set of criteria to identify other activities to be included in the EU Taxonomy through the future four delegated acts, which will determine which sectors and activities contribute to one or more of the following environmental objectives:

• sustainable use and protection of water and marine resources,
• circular economy,
• pollution prevention and control,
• protection and restoration of biodiversity and ecosystems.

Not least, the Commission provided a set of recommendations on transition finance for companies and the financial sector, showing how to use the various tools of the sustainable finance framework on a voluntary basis to steer investments toward transition and manage the risks arising from climate change and its impacts on the environment.

The objective of these recommendations is to support investments for so-called “laggards”, i.e. companies that have been late in making progress, or those that have a longer road to transition ahead of them due to the intrinsic characteristics of their business or size issues.

Sustainable finance, Taxonomy also reaches states outside the EU

While the process is underway in Europe, other states outside the old continent are beginning to develop a lexicon of sustainable finance. 

This is happening for example in Latin American countries, where Colombia has launched its own taxonomy to strengthen sustainable financing in the country, leading the way for Chile, Mexico, and Peru. In North America, it was Canada that published the “Taxonomy Roadmap Report”, a document that serves as a guide for the development of a new taxonomy of green investments in order to create the clarity needed for industry players actively seeking sustainable investment opportunities.

In Asia, this is the case in states such as Indonesia, Sri Lanka, and Kazakhstan. The European taxonomy is a benchmark for everything and is then adapted to the national context, according to specific circumstances.

Will it lead to a worldwide taxonomy? On the contrary, there are already common elements between the different documents proposed by the states. In particular, the European model is becoming the benchmark, with its six objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.

The various states are therefore adapting actions and criteria to the national context, according to specific needs. Colombia, for example, has focused a lot on directing investments toward soil conservation.

The road ahead is obvious, as is the fundamental role of the financial world in supporting the ecological transition to environmental sustainability.

^[1] https://www.consilium.europa.eu/it/press/press-releases/2019/12/18/sustainable-finance-eu-reaches-political-agreement-on-a-unified-eu-classification-system/

^[2] https://ec.europa.eu/sustainable-finance-taxonomy/home

^[3] https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en

Our statement

On June 5, 2023, NOVIS received a decision from the National Bank of Slovakia (NBS) to revoke its insurance license. NOVIS has reviewed the decision signed by the NBS governor, Mr. Peter Kažimír, and is surprised by the number of errors it contains. 

Moreover, all the evidence that NOVIS submitted to the NBS was ignored. This even includes the expert opinion of a court expert from Vienna, who asserts that the NBS distorted the Solvency balance of NOVIS to such an extent that the expert used the term 'falsification' in relation to the NBS procedure.

NOVIS is convinced that the NBS decision is incorrect and based on a flawed assessment of the facts and incorrect application of the relevant laws. The insurance company is therefore preparing an administrative lawsuit and will ask the court to postpone the effectiveness of the decision. NOVIS expects a fair process from the court, especially given that several important documents were deliberately not made available to it during the proceedings before the NBS. NOVIS repeatedly for a long time pointed out the proven bias and illegal actions of specific NBS officials, and therefore also turned to the General Prosecutor's Office.

In accordance with this decision, NOVIS is not authorized to conclude new insurance contracts, but nothing changes for existing clients, they still have valid agreed insurance coverage as well as the obligation to pay premium.

More important information:

• Press Release: National Bank of Slovakia Revokes License of NOVIS Company (Author: NBS)
• NOVIS Company - Frequently Asked Questions (Author: NBS)

Improving access to prevention, correct information, and treatment is one of the objectives of the insurance world, especially for diseases such as ovarian cancer which are scarcely discussed and typically diagnosed late.

It represents the eighth most common neoplasm in women worldwide, but the causes leading to its occurrence are still unknown. Ovarian cancer^[1] accounts for about 3.4% of all women’s cancers worldwide, with a higher incidence in high- and very high-income countries (7.1%) than in middle- and low-income countries (5.8%).

Yet it is rarely discussed, so much so that according to the World Ovarian Cancer Coalition, most women have little or no knowledge of the risks, symptoms, and dangers that ovarian cancer entails.

Often, moreover, non-authoritative information found on the web can be misleading. The correct information is, however, essential to detect symptoms early and, consequently, speed up diagnosis times.

That is why every year on 8 May, on World Ovarian Cancer Day, leading organizations supporting ovarian cancer patients unite to raise global awareness about one of the most severe cancers affecting women.

Ovarian cancer: the challenge of speeding up diagnosis time

“Ovarian cancer” refers to numerous types of cancer affecting the ovaries, fallopian tubes, and the thin inner lining of the abdomen. The exact cause of ovarian cancer is not yet known, but there are risk factors that may increase the likelihood of its occurrence.

One particularly decisive factor is the mutation of the BRCA1 and BRCA2 genes, which produce proteins capable of blocking the uncontrolled spread of cancer cells.  Generally inherited, a BRCA1 and BRCA2 mutation leads to a predisposition to developing ovarian, breast, and prostate cancer more frequently than in the general population.

Age is also a risk factor^[2] because about 8 out of 10 cases are diagnosed in women over the age of 50, mostly after menopause. Lifestyles also matter, from alcohol use to smoking to body weight.

Unfortunately, ovarian cancer is one of those diseases which are rarely diagnosed early, as the absence of specific symptoms and the lack of information regarding the neoplasm tend to result in it being discovered at an advanced age.

This represents a major problem: when the disease is discovered early, 5-year survival is 90%, whereas if the diagnosis is made at an advanced stage (as in 75-80% of cases), 5-year survival drops to 30-40%. 

Among the reasons for late diagnosis are the difficulties associated with screening for this type of cancer. Internationally, the available screening options are rather limited and mostly accessible only to women considered to be at higher risk, i.e. those with a significant family history of breast or ovarian cancer, or with a known genetic predisposition, such as Lynch syndrome or BRCA gene mutations.

The rest of the global female population relies on the symptoms of ovarian cancer being recognized early, which, however, often occur subtly or not at all until the tumor is advanced. For this reason, the adequacy of diagnosis, staging, and treatment is crucial to improve long-term prognosis.

Why the insurance world can help speed up diagnosis times

The insurance industry has always been attentive to changes in society, possible risks that may arise, and innovations that may help to overcome certain critical issues.

This also includes the focus on health issues, which directly affect people's lives and, consequently, society as a whole.

Medical advances, for example, provided the basis for the wording of the first policy for people with HIV in Italy, to which NOVIS made its contribution, laying the foundations for a more inclusive society.

Similarly, World Health Days dedicated to particular diseases are an opportunity to disseminate correct information on symptoms, diagnosis, and treatment, which can help improve prevention and, consequently, people's lives, mitigating the risks to which they may be exposed.

Today, incidentally, health is no longer “exclusive” to insiders, as the advent of the web has led to so much information being made available to people, who are, however, unable to check its accuracy. As a matter of fact, various different stakeholders are now talking about health, not all of them authoritative and credible, but for those without technical expertise, it is difficult to distinguish the truth from the false.

There is a serious risk of fake news undermining the professional, serious work done by doctors and scientists: Covid was one example, but the problem cuts across different areas.

Days like the one on 8 May are very important for bridging the misinformation gap, but authoritative sources need “sounding boards” close to the people. In this way they can bring correct and verified messages to as many people as possible and inform them of services accessible through insurance, providing medical advice that is otherwise difficult to obtain quickly.

In this task, the insurance industry can make its contribution by facilitating access to services such as the Second Medical Opinion, which can be instrumental in detecting the disease early on, to ensure rapid treatment.

^[1] https://acsjournals.onlinelibrary.wiley.com/doi/epdf/10.3322/caac.21660

^[2] https://www.issalute.it/index.php/la-salute-dalla-a-alla-z-menu/c/carcinoma-ovarico#cause

Always attentive to new opportunities emerging on the market and the need to diversify portfolios with a view to sustainability, NOVIS launched a fund in 2022 to allow investments in companies that produce clean energy. 

Sustainability is one of the drivers that has changed the financial world the most in recent years. Increased public awareness of critical environmental issues has, in fact, led to a greater awareness of the need for everyone to play their part, through their own choices.

In the financial sphere, this has resulted in increased demand for sustainable investments, in line with ESG criteria, in order to channel more capital towards companies that pay more attention to environmental and social impacts.

Europe itself is encouraging this turnaround, as the injection of private capital is crucial to achieving the ambitious goal of climate neutrality.

Aware of the important role that finance can play in channeling capital to support the ecological transition and how this can open up new opportunities for investors, NOVIS, a European insurance company specializing in life insurance, launched a fund in 2022 for those who wish to diversify their portfolios by investing in the ecological transition, one of the cornerstones of the European strategy to achieve climate neutrality.

Clean energy: investing with the NOVIS fund

Moving away from fossil fuels means reducing greenhouse gas emissions, so being able to produce energy using clean sources will allow production to continue while limiting the impact on the environment.

Compared to the different challenges of the ecological transition, the green energy challenge is among those witnessing significant progress in terms of available technologies. For this reason, it offers investors not only the possibility to diversify their portfolios by including assets that respect ESG criteria but also to seize interesting opportunities emerging from the market.

The insurance fund NOVIS Sustainability Plus aims at this double objective; launched in August 2022, it joined the Sustainability Insurance Fund which promotes environmental and social features in line with the Sustainable Development Goals (SDGs) defined by the United Nations.

The Sustainability Plus fund invests directly or indirectly in equities or bonds with a requirement of at least 45% of assets in energy-related companies without negative impacts on the environment (clean energy), such as the release and emission of greenhouse gases into the atmosphere like carbon dioxide. In addition, at least 45% of activities must be invested in the sustainable use of marine resources for economic development, improved livelihoods and employment, and preserving the well-being of the marine ecosystem (blue economy).

How green energy companies are selected

At a time when sustainability criteria are still being defined internationally, managers have a key role in choosing and managing assets that follow ESG criteria.

As far as Sustainability Plus is concerned, investments in clean energy are made through the underlying iShares Global Clean Energy UCITS ETF, which invests in companies engaged in the production of clean energy or the provision of green energy technologies, both in developed countries and emerging markets. Companies that exceed their emissions from coal use are excluded.

The fund is managed by BlackRock Asset Management Ireland Limited. It is an authoritative manager, recognized as one of the world’s leading asset managers, with a proven track record also in sustainable investments.

As a guarantee for investors, there is also the assessment of Morningstar, which, in recent years, has defined criteria for assessing the actual sustainability of the numerous funds on the financial market. In particular, according to the Morningstar Sustainability Rating, which assesses how well portfolio companies are managing ESG risks compared to other funds in the same Global Category, iShare Global Clean Energy has a rating of 4 out of 5 (rating up to date as of 31 January 2023).

The NOVIS fund, therefore, qualifies as a solution for those wishing to support the energy transition by seizing existing opportunities and diversifying their portfolio.

The relatively widespread occurrence of diseases may impact insurability under life insurance policies. However, advances in medical and scientific research may change this state of affairs, HIV being a case in point. 

The history of mankind has been periodically marked by epidemics, resulting from contamination by invisible enemies – viruses – circulating through trade routes and normal, everyday people-to-people contacts. These have plunged entire populations into terrible circumstances.

The COVID epidemic was the latest, but going back in time equally terrible events can be noted. Think, for example, of the “Spanish flu”, which caused millions of deaths as it spread over two years, or the Black Death of the Middle Ages.

Advances in medicine and the increased focus on prevention, starting with hygiene practices and healthier living conditions, have reduced the frequency of epidemics or pandemics, but not caused them to disappear, so much so that the World Health Organisation is already predicting new ones.

The sense of increased vulnerability increases people’s demand for protection. It is no coincidence that, after COVID, there was a surge in applications for life insurance policies. How does the insurance world deal with high-frequency diseases?

Health, epidemics and insurance protection

The insurance world is, by its very nature, concerned with protecting against emerging risks that may cause personal injury.

Health falls within this scope, so much so that there are ad-hoc insurance solutions to help those affected by accidents or illnesses to support treatment and supplement their income in the event of inability to work, in a way that complements what is provided by the public health system.

Even in the case of epidemics, when the demand for insurance coverage increases, the insurance world tries to meet the demand, while trying to safeguard the balance between premiums and coverage should the insured event occur.

In order to maintain this balance, the conditions for the insurability of the risk must be met.

This means that the loss, however significant, must be definite, that the event causing the loss must be accidental and not influenced by the insured’s will, and that the probability of the loss must be foreseeable.

In the case of epidemics, the latter aspect, i.e. the probability of a loss, is diminished, because the spread of the virus no longer follows a physiological pattern.

With COVID, for example, a discussion emerged on the possibility of providing life insurance for pandemic risk. The topic is still under discussion, although initial analyses worldwide seem to suggest, for the time being, that this hypothesis is unrealistic.

The magnitude of an event such as COVID, for example, would make the probability of a loss unforeseeable, thus negating one of the conditions of insurability. Moreover, in the absence of treatment options, the insurance world may not be able to cope with the eventual compensation requested.

The situation is totally different, however, if there is a cure that reduces the risk of mortality, as was the case with another epidemic, that of HIV.

The impact of medical advances on insurability: the case of HIV

In the 1980s, the world witnessed the spread of the HIV virus. This virus can lead to the development of AIDS, a syndrome that can occur even several years after infection and which causes the immune system to shut down, making the body lose its ability to fight even the most mundane infections. Since it began in 1982, AIDS is estimated to have caused 35 million deaths worldwide.

The improved knowledge of transmissibility factors has led to a reduction in the number of new diagnoses over the years: from a peak of 3.2 million new infections in 1996, it fell to 1.5 million in 2021.

The other great victory was the ability of medical-scientific research to study anti-retroviral therapies capable of blocking the virus in HIV-positive people, preventing the development of AIDS. By late December 2021, 28.7 million people living with HIV had access to anti-retroviral therapies, representing 75 percent of the total, while 81 percent of pregnant women had access to anti-retroviral therapies to prevent transmission of the virus to the unborn child.

Not only that: in recent years there have been cases of people recovering from the virus^[1].

Advances in treatment also have a tangible impact on the possibility of insuring the lives of people with HIV, as by making the probability of risk foreseeable, the conditions of insurability necessary to ensure concrete and sustainable cover are fulfilled, paving the way for the first insurance solutions dedicated specifically to HIV-positive people.

^[1] https://www.forbes.com/sites/tylerroush/2023/02/20/5th-man-cured-of-hiv-after-stem-cell-transplant/

Created in 2013, the Gold Insurance fund invests in funds traded on the gold exchange, to offer investors and savers an opportunity to access this sector to diversify their portfolio. 

The investment process is a journey of choices that can change over time, depending on one’s personal life situation, but also on external conditions influenced by major international scenarios. The last few years have been a prime example in this regard, in that macroeconomic dynamics were profoundly altered by the pandemic followed by the war in Ukraine, which also impacted investment choices.

Therefore, one of the strong messages when planning and constructing one’s portfolio is to diversify one’s assets, not only in terms of quantity but also in terms of exposure to possible risks, which should be as decoupled as possible.
This means that it may be appropriate to allocate a share of investments to assets that have historically proven to be anti-cyclical because their value increases in times of heightened market volatility or turbulence.

One such asset is gold, which, not surprisingly, is considered a safe-haven asset par excellence. This is despite not being easy to access, given that it presents several barriers to entry for non “insiders”.

To also offer investors and small savers the option of including this opportunity in their portfolios, NOVIS, an international insurance company, has created the internal Insurance Gold fund, which is specifically linked to gold.

Insurance Gold, what the NOVIS Fund is

Created in 2013, the Fund aims to achieve a long-term return higher than the inflation rate by allowing investors – including retail investors – to access the gold market.

The focus is gold ETFs (exchange-traded funds), whose change in value is linked to the change in gold prices: these funds replicate the price of this commodity.

The Fund itself cannot hold precious metals or physical gold, but its underlying assets can, on which the return on investment and the value of the investment largely depend.

The portfolio structure is not fixed but can change over time depending on market conditions. Specifically, the Gold Insurance Fund invests:

• up to 100% Gold ETFs, with a preference for liquid ETFs; these are denominated in euros or US dollars and managed by companies recognized for their robustness, authority, and transparency;
• up to 20% in bank deposits, in banks within the European Economic Area, established for at least one year.

The underlying asset is the SPDR® Gold Trust, an investment trust established in 2004 that holds gold and periodically issues shares (SPDR® Gold Shares) against deposits of gold (one basket equals 100,0000 shares). The Trust’s investment objective is for the shares to reflect the performance of the gold bullion price, excluding the Trust’s expenses.

NOVIS’ choice fell on this entity because of the proven experience and international authority of the entities that handle the Trust. World Gold Trust Services is the promoter, while BNY Mellon Asset Servicing, a division of The Bank of New York Mellon, is the Trustee of the Trust, and HSBC Bank plc is the custodian, handling the logistics of storing and insuring the gold.

More accessible gold market

NOVIS’ Insurance Gold Fund offers investors the opportunity to participate in the gold market, which has historically been inaccessible to retail investors and savers and, in general, to those without long-standing experience in this area.
The possibility of buying through the correct channels (there have been many attempts to defraud by counterfeiters), but the storage, maintenance, and insurance of physical gold represent a major barrier to entry due to the costs and logistics involved, which require stable arrangements reinforced by experience.

An instrument such as NOVIS’s Gold Insurance Fund, however, is a solution that breaks down these barriers, making the opportunity to invest in the gold market accessible and cost-efficient, as the expense associated with the investment is, in any case, lower than what it would take to buy, store and secure gold bars.
Furthermore, maximum transparency is ensured, as the Trust does not hold or employ derivatives, and all of the Trust’s holdings and their value based on current market prices are reported on the Trust’s web site every business day.

As it is in its DNA, NOVIS, therefore, allows you to benefit from the opportunities to diversify your portfolio with gold investments and preserve your capital, especially in times of economic uncertainty and raised inflation.

The European Union's Energy Performance of Buildings Directive has opened up a wide debate in Europe on when and how to implement it, as has already happened with the phase-out of the endothermic engine from 2035. These cases illustrate the critical nature of such an epoch-making change as the energy transition, but it is also opening up new investment opportunities. 

From extreme events to droughts, the evidence of climate change has resulted in Europe outlining a very clear path to decarbonization, favoring an economy based on renewable energy sources and a development model that is more focused on sustainability. The urgency of doing this has been reinforced by the war in Ukraine, which has shown how energy dependence on one country (Russia) exposes the entire socioeconomic system to the volatility of geopolitical issues.

While the shared goal of sustainability has been outlined, how to achieve it is proving to be more divisive than expected, as demonstrated by the debate on so-called “green homes” that are currently taking place within Europe.

Green housing: what the European directive envisages and why it is controversial

The Energy Performance of Buildings Directive is one of the components of the “Fit for 55” package, the European Union’s plan to reduce emissions by 55% by 2030 to come closer to climate neutrality.
One of the pillars for this transformation is energy efficiency which, inevitably, also comes through buildings. This is because, according to the European Commission, buildings are responsible for 40% of energy consumption and 36% of direct and indirect energy-related greenhouse gas emissions.

What does the standard provide? The content is still being developed and the final content will probably be ready by the summer of 2023. The key points in the draft legislation prepared by Brussels, however, include the new definition of “zero-emission buildings” (ZEB), replacing “nearly zero-energy buildings”. In other words, we are talking about buildings that can function and ensure maximum comfort by comprehensively eliminating emissions emitted during the building’s life cycle, through energy efficiency and renewable sources which should also power household appliances.

The ideal goal would be to have a completely zero-emission building stock in Europe, as quickly as possible.  In the Commission’s first draft, for example, all public and non-residential buildings were scheduled to reach class F in January 2027 and class E in January 2030, while for residential buildings the deadlines were January 2030 for class F and January 2033 for class E.

However, these wishes clash with the realities of different countries, which have a highly diverse building stock. Those with significant percentages of buildings in low energy classes are trying to bargain for more “accommodating” thresholds and timeframes (in particular, countries such as Italy, Greece, Poland, Sweden, and Slovenia).

The latest text says that by 1 January 2030, all residential buildings will have to be in energy class E, and by 2033 they will have to be in class D, to achieve zero emissions by 2050. However, sanctions will be decided by individual States.

The negotiations are not yet over. From 13 to 16 March, the draft is expected to reach the plenary session of the European Parliament and will become the basis for negotiations held by each Member State before reaching the final version.

The energy transition, from uncertainties to opportunities

The events surrounding “green housing” are an example of what is likely to happen during the energy transition and the ecological transition in general.
Transition inevitably leads to changes in long-established and entrenched paradigms and development models, forcing a profound transformation of the economic system. In the short term, this could also lead to negative impacts on entire sectors on which the transition will have the greatest impact.  A further example is the phase-out to the endothermic engine from 2035, criticized by some countries for being implemented too quickly: the concern is that companies will have little time to convert.

These events represent the double face of the ecological transition. On the one hand, negotiations to revise measures and targets will be a constant in the coming years, to reconcile environmental objectives with social, economic, and territorial cohesion objectives.

On the other hand, however, the road to greater sustainability is inevitable and there will be no turning back. This is opening up new opportunities for investors because in order to change the development model, public resources will not be enough: funding channels will also be needed from the private sector. This is opening up new prospects for retail investors who, through solutions focused on clean energy, can contribute to the transition and take advantage of emerging opportunities, while diversifying their portfolios with a view to sustainability as well.

Among the innovations introduced by the international insurance company is the option of suspending premium payments while keeping the insurance coverage in place, to cope with unforeseen changes.

Medium- and long-term planning of one’s asset management is crucial in deciding whether and how to invest and how to integrate investment and insurance protection. On the other hand, however, uncertainties are unavoidable, because life can involve unpredictable events or certain situations that simply change, disrupting plans and changing priorities.

To support customers throughout their life cycle, international insurance company NOVIS has always introduced innovations to make insurance solutions flexible so that they can evolve in parallel with people’s needs.

Innovations in Insurance: suspended premium, warranty unaffected

NOVIS’s approach has always been characterised by the desire to act as a single point of contact for customers, both for insurance protection and for the option of investing in widely diversified internal funds capable of seizing emerging opportunities.

This has led to the development of solutions with a medium- to long-term timeframe, which allows investment risks to be mitigated and provides broad-based protection.

On the other hand, life situations can change over the years, altering the initial conditions under which the choice to build one’s investment portfolio was made.

One of the most common situations is the variability of people’s employment status, especially in the face of contemporary labour market dynamics. These are characterised by profound changes triggered by COVID and demographic dynamics. Compared to the past, when career paths were stable and predictable, today the world of work is distinguished by flexibility, which implies opportunities for change to pursue brighter careers, but also relatively long periods of lay-offs.

The fear of not being able to meet the commitment of an investment on a consistent basis may discourage one from starting the investment, leading to missed opportunities in terms of asset protection and growth. Therefore, NOVIS has designed a solution to respond to a widespread fear that may lead to irrational choices, by introducing premium suspension into its products.

This is a mechanism whereby the policyholder who has chosen a recurring premium plan may request to suspend the payment of the scheduled premium, starting as early as the first month of the contract^[1]. This choice, which may be dictated, for example, by a sudden change in one's employment situation, does not cause the validity of the contract to lapse, so the insurance covers remain in place for the accumulated capital share.
If, for example, the policyholder dies during the suspension period, the company will pay the beneficiaries the sum insured, equal to the value of the contract at the time of death, and the sum insured in the event of death.

At any time, the policyholder may resume premium payments, choose to supplement them with additional premiums or exercise the surrender option.

Flexibility for every need

The option of suspending the premium, provided for in most NOVIS solutions, is an option that introduces flexibility into insurance products, making investing more accessible to anyone who wants to build up assets over time, realise their plans and protect their loved ones.

Thus NOVIS confirms its willingness to stand by people as a single point of contact for both insurance and finance.

Depending on one’s profile, one can choose the most suitable NOVIS solution to meet capital preservation or growth needs or to invest sustainably, through internal funds that apply maximum geographical, sectoral, and currency diversification.

In addition to investment opportunities, an option such as premium suspension allows one to adapt one’s portfolio to changing life situations, reconciling the need for security with the possibility of seizing opportunities in the financial markets.

^[1] Technically, the recurring premium instalment due shall be deducted from the Initial Single Premium and, likewise, for the subsequent recurring premium instalments, until the policyholder pays the recurring premium instalments under the Recurring Premium Plan.

According to the experts, rates will continue to rise at a slower pace than in 2022, while we will have to wait until 2024 to see a reduction. What scenarios are opening up for investors? 

On the financial side, 2022 was marked by the first interest rate hike decided by the European Central Bank after a decade in which rates had been kept at deficient levels through the purchase of government bonds.

 In July^[1], however, the Governing Council of the ECB decided to raise the three key interest rates by 50 basis points, “in line with its strong commitment to fulfilling its mandate to preserve price stability”. For the same reason, another even sharper intervention followed in September(+75 basis points), after which came a rise of 50 basis points in December. The same happened on the other side of the ocean, where the Fed also revised its interest rate policy.

In the new year, analysts and observers are waiting to see what the next moves of the European and US central banks will be. Monetary policy has an impact on the economy and, consequently, becomes one of the variables that investors have to take into consideration when planning their asset allocation.

Monetary policy: the impact on the economy

Monetary policy is the set of money supply and interest rate choices that are generally made by a state’s central bank to achieve economic policy objectives.

In Europe, with the Economic and Monetary Union, the Member States have delegated this task to a single institution in practice: the European Central Bank. As clearly stated^[2], it has the principal task to keep prices stable, in favor of economic growth and employment.

As explained by the ECB itself, in fact, its objective is solely to “preserve price stability by ensuring that inflation remains low, stable and predictable”. The mission is to achieve an inflation rate of 2% in the medium term. “We pursue this goal symmetrically: for us, overly low inflation is just as bad as overly high inflation” explains Europe’s top banking supervisory body.

When a recession or crisis marks the economic environment, as was the case after 2008–09 and after 2012, the response of central banks is usually to adopt an expansionary monetary policy. By reducing key interest rates and buying securities, and through soft loan schemes and open market operations, central banks help to keep government bond rates low and stimulate liquidity to encourage consumption and business investment.

Conversely, when inflation is excessive or prolonged, as has been the case since 2022, prices rise so high that they erode the purchasing power of households and businesses. At this point, the central banks intervene to curb the price run with a restrictive monetary policy, which reduces the amount of money in circulation by reducing the direct purchase of securities and raising interest rates.

Balance is the key word here: an overly expansive monetary policy can, in fact, lead to excessive inflation in the medium term, while one that is too restrictive can trigger a downward spiral on the economic growth front, holding it back.  

Why central bank decisions also affect investments

In fact, monetary policy plays an important role in economic system trends, households’ and companies’ access to credit, trade, and – directly and indirectly – also financial markets.

Interest rate policies influence the cost of money, and thus also the cost of public and private debt. On the financial side, this has an impact, for example, on government bond yields and, therefore, on the choice between bonds and equities when making asset allocations.

Central bank policies also condition currency exchange ratios in international markets, because higher interest rates attract foreign capital as they offer higher yields than other countries, leading the reference currency to rise. This aspect, therefore, has to be assessed with a view to the geographical and currency diversification of one’s investment portfolio.

Another key aspect is the ability of monetary policies to maintain economic stability. As explained by the Central Bank itself^[3], “the financial system benefits from price stability: it is easier for citizens and companies to plan and invest knowing that prices will not change much over time”.
A symbolic case is the 2008 financial crisis, which, by disrupting the flow of money in the economy and creating unstable financial markets, led to an unstable system in which citizens and businesses struggled to access finance and, consequently, to restart the real economy. Therefore, the ECB in Europe and the Fed in the US have adopted an expansionary policy to help keep prices stable, helping the economy and the financial system to recover.

Now the international conditions are different from 2008 but no less complex. In a situation still feeling the effects of COVID, rising energy costs, and geopolitical instability, the financial market is looking closely at the policies of the ECB and FED to see if and how much they will be able to intervene to create stable conditions.

According to forecasts^[4], the ECB should continue to expect a further increase in rates in 2023, albeit reduced compared to 2022, while only in 2024 could this lead to a reduction, if the measures taken in this two-year period have had their full effect and inflation has come down towards 2%.

Will this be enough to maintain market stability, considering that there are many variables affecting the stability of the system?
Certainly the rise in rates, despite being smaller, indicates that the top banking authorities still expect inflation to rise in 2023, against which solutions focused on assets such as gold – a safe haven asset par excellence – may allow portfolio diversification consistent with their objectives of capital preservation and enhancement.

^[1] https://www.ecb.europa.eu/press/pr/date/2022/html/ecb.mp220721~53e5bdd317.it.html

^[2] https://www.ecb.europa.eu/ecb/tasks/monpol/html/index.it.html

^[3] https://www.ecb.europa.eu/home/search/review/html/monpol-financial-stability.it.html

^[4] https://www.bloomberg.com/news/articles/2023-01-30/ecb-rates-march-in-focus-after-half-point-hike-assured-this-week

Career prospects and dynamics play a crucial role in financial planning, as they impact on available incomes and the need for protection. After COVID, big changes are taking place in the European labor market. Let's take a look at them. 

Work is one of the cornerstones that guide most of the important choices everyone must make throughout life. One's educational path, for example, is normally focused on acquiring the skills relevant to a certain type of profession, just as the timing of certain personal choices, such as starting a family or buying a house, is dictated by career developments.

Financial planning and investment choices are also closely linked to work dynamics. Indeed, one's current and future earning capacity depends on work, since pensions are also calculated based on the income received during working years.
A young person who has the prospect of finding employment and access to stable, growing incomes will tend to make different investment choices – probably more oriented towards enhancing the value of assets than safeguarding them – than someone working in an employment market that provides no guarantees of stability.

For this reason, when constructing an investment portfolio, it is also useful to consider the individual's present employment situation and future prospects, bearing in mind that these depend not only on the individual's abilities but also on the environment in which that individual lives. In a globalized world, this is no longer simply a local or national matter but must extend to at least the European level.

Labor in Europe: the impact of COVID

International mobility, the result of the harmonization policy between European states, has helped to create a labor market that, if it cannot be called European, is nevertheless integrated across different countries of the Old Continent.

The European Commission, which monitors labor mobility between Member States, noted in its latest available report how the number of Europeans who live and work in another European country is steadily increasing: in 2019, 17.9 million Europeans resided in another EU country, 13 million of whom were of working age^[1].

One cannot, of course, overlook the impact of the pandemic, which has affected all countries and Europe as a whole. Before the economic impact of the COVID-19 crisis began to make itself felt, the labor market recovery in Europe was bringing the EU employment rate closer to the 75% target set by the EU2020 strategy.

A very detailed picture of the impact of COVID on the labor market in Europe was provided by Eurofound, European Foundation for the Improvement of Living and Working Conditions, in its publication "Recovery from COVID-19: The changing structure of employment in the EU" ^[2]. According to the analysis, COVID came to an abrupt halt, but the recovery was rapid, helped by policy interventions and public support at both national and European levels. In particular, employment levels in Europe have returned to pre-crisis levels in two years, compared to almost eight years after the 2008 financial crisis.

However, there were large disparities between sectors. While employment in hotels and restaurants, wholesale and retail trade, and transport recorded a cumulative loss of 1.4 million workers between 2019 and 2021, the information and communication sector added 1 million jobs during the same period.

Although job losses during the pandemic were concentrated in low-paying jobs, the upturn in employment levels in 2021 was driven by growth in well-paid jobs and occupations. Throughout the period 2019-2021, increases in well-paid jobs were greater among women than men in the EU27, while at the same time, job losses were more acute for women in low-paid jobs.

According to Tina Weber, Head of Research at Eurofound, Employment Unit: "There are still six out of ten people who are on open-ended, non-time-limited contracts. Although the figures for "atypical work", i.e. part-time and fixed-term employment, have not really changed in the last five to ten years, they belie a trend towards more precarious forms of work and people with precarious contracts do not have the same access to employment or social protection".

Aging population

The legacy of COVID is thus greater inequalities between well-protected workers and workers with limited access to social protection and employment rights.

This trend dovetails with another macro-trend, which has been ongoing for some time, namely the increasing age of the population. This poses many challenges in relation to employment, working conditions, living standards, and welfare, as it gives rise to concerns about the sustainability of pension systems and labor supply. In 2016^[3], the employment rate of older workers aged 55-64 in the EU stood at 55.3%, compared to 66.6% for those aged 15-64, where the largest increase was among women.

The European statistics^[4] show how demographic dynamics have already significantly altered the European labor market, with a steady growth in the portion of employed persons between 55 and 64 years old(12.5% were in this group in 2009, and 19% will be in 2021) and a decrease in the proportion between 15 and 24 years old (9.2% in 2009, 7.8% in 2021).

In the long run, the trend shows that the 55-64 age group is tending to grow and be less volatile than younger workers, even in the 2020 COVID years.
What will the future look like? In order to maintain the sustainability of the system, flexible forms of retirement are being considered, providing the opportunity for prolonged employment. The risk otherwise is that the burden of welfare spending will put a strain on the welfare system.

In a context of increased precariousness and possible reduced protection from the public system, financial planning is presenting an opportunity to build forms of supplementing labor income and pensions, with solutions that make investment accessible through customization based on income capacity, and that facilitate it even in periods of job insecurity.

^[1] https://ec.europa.eu/social/main.jsp?langId=en&catId=89&furtherNews=yes&newsId=9877

^[2] Eurofound (2022), Recovery from COVID-19: The changing structure of employment in the EU, Publications Office of the European Union, Luxembourg https://www.eurofound.europa.eu/sites/default/files/ef_publication/field_ef_document/ef22022en.pdf 

^[3] https://www.eurofound.europa.eu/it/topic/ageing-workforce

^[4] https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Employment_-_annual_statistics#Impact_of_the_COVID-19_pandemic_and_recovery

NOVIS' approach has always been to support customers throughout their lives, adapting products to their evolving needs. Flexibility is also crucial for dealing with the international backdrop of uncertainty.

As was the case in previous years, 2023 could also be a year characterized by uncertainty at the global level, as the effects of the war in Ukraine, rising energy prices, and inflation will continue to be felt, also affecting the financial markets. How should investments be dealt with in this context?
A keyword is flexibility, i.e. the ability to adapt the portfolio to the contingency of the moment, so as to keep the investment in line with one's objective and risk profile.

This is a feature that NOVIS has always included in its products.

Adaptability to scenarios: the NOVIS approach

Since its inception, NOVIS, an international insurance company specializing in life insurance, has always been committed to developing products that can support investors throughout their lives.

This has led to the development of insurance and investment solutions capable of adapting to changing needs and requirements, which vary with age, career progression, family dynamics, and health-related care needs.

To be able to manage the many variables that may arise in its life cycle, NOVIS has introduced important elements of flexibility into its products, which enable it to align the mechanisms of investment – which naturally have their own dynamics in relation to the financial markets as well – with the needs of the investor.

Any examples?

On the insurance front, in addition to the possibility of choosing between annuities or a lump sum, NOVIS products make it possible to add insurance coverage or insured persons without restrictions on numbers as the family situation evolves. This makes it possible to maintain the same insurance solution over time, increasing the number of beneficiaries and insured persons without administrative costs (only the premium is adjusted) and without entering into new contracts.

Investment flexibility with NOVIS

In strictly financial terms, NOVIS has a diverse range of funds from which investors can choose to define how assets are to be allocated at the start of the contract, according to their investment profile. However, changes can be made each month to the allocation of insurance funds, by adapting one's portfolio to financial market trends in line with one's objectives and profile.

An invaluable ally in this respect is the Switch, designed by NOVIS to give the option of divesting initially subscribed units in full or in part at an early stage and reinvesting them in another internal fund for the corresponding counter value. With Switch, it is thus possible to make a long-term investment flexible, maintaining the same investment solution within a diversified portfolio. However, it can be changed over the course of a lifetime.

Portfolio diversification, a broad time horizon, and flexibility tools, such as those devised by NOVIS, along with expert advice are the key to navigating a constantly changing scenario and not giving up emerging opportunities while continuing to pursue long-term goals.

Focusing on government bonds of Eurozone countries, the NOVIS Guaranteed Growth Insurance Fund offers the possibility to diversify and balance portfolios, with a solution that guarantees the value of the invested capital. 

The search for security is one of the needs pursued by investors, along with the return. However, these two objectives are at odds, because the return is closely linked to risk: the riskier an investment is (and therefore potentially profitable), the less absolute assurance of interest and capital repayment can be given.

In order to balance these two requirements, however, it is possible to construct investment portfolios in which the more profitable component is flanked by more capital-return-oriented solutions that invest in instruments traditionally considered low-risk, such as government bonds.

For this purpose, NOVIS, an international insurance company, has since its inception in 2013 created the Guaranteed Growth Insurance Fund, a fund that provides the opportunity to rebalance portfolios, always with a view to investment diversification.

Guaranteed Growth Insurance Fund: what the NOVIS Fund is

As an insurance company, NOVIS specializes in life solutions that offer a wide range of long-term protection and investment opportunities through its internal funds, making it a one-stop shop for both insurance protection and investment.

A dominant feature of NOVIS is its focus on developing innovative proposals to seize emerging international opportunities and to provide answers to evolving investor needs.
To respond, in particular, to the need for investor security, such as has been emerging in recent months, back in 2013 NOVIS developed the Guaranteed Growth Insurance Fund, a fund that invests in government bonds issued by Eurozone countries.

This is an internal fund that provides 100% guaranteed capital for the entire duration of the insurance policy. In addition, this fund includes positive appreciations each month, equal to the expected return published annually on the company's website.  The announced rate of return for 2022, for example, is 3.66%.

The fund can invest in two types of underlying assets.
The main focus is on bonds, i.e. debt securities against which interest is paid. In particular, the bonds in which the NOVIS Fund invests are government bonds (i.e. bonds issued by states) or bonds guaranteed by state entities within the European Economic Area (Austria, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Czech Republic).

In addition, the fund may invest in deposits, particularly those of banks in European Economic Area countries or in foreign banks operating in these states.

How is the Fund made up? Under normal market conditions, the company observes the following asset allocation limits:

• up to 100% investment in bonds;
• up to 20% in market instruments and deposits.

The portfolio structure is fixed; the proportion of investments in bank deposits may change over time, depending on market conditions, always with a view to pursuing the investor's objectives by adapting to their needs and market conditions.

 An update on the Fund's performance is always available on the NOVIS website, while the guaranteed return for the coming year is indicated annually.

Due to its characteristics, the NOVIS Guaranteed Growth Insurance Fund can help diversify the portfolio by investing in bonds of European countries.

In this way, it is possible to balance the equity component and investments in other assets, finding the most efficient mix to meet the investor's need for security and return.

2022 was a difficult year for the financial markets, which reacted to the international scenario with high volatility. 2023 will still be affected by international dynamics, but there could be an improvement. 

2022 was a very complex year, probably one of the most difficult faced by the financial markets, which experienced fluctuating trends and high volatility.

The war in Ukraine took place in highly challenging international circumstances related to the COVID pandemic, with consequences for rising energy prices that hit businesses and households and led to higher inflation in Europe.

The climate emergency also overshadowed this situation, in response to which the complex ecological transition was initiated, requiring significant public-private investment. 

With 2022 set aside (or almost), all eyes are now on 2023: what kind of year will it be? What can we expect on the financial market front? How should investments be managed?

Towards 2023: the unknown inflation factor

One of the things that characterized 2022 and marked a break from the past was the rise in inflation, which reached record highs in Europe. From a financial point of view, it was probably the most important, long-awaited event, which also led investors to review the construction of their portfolios. 

In the Old Continent, the increase is mainly driven by supply-side dynamics, particularly energy price trends, while in the US inflation is more related to increased demand for goods and services that are available in smaller quantities due to supply chain problems, which drive up prices.

On the two continents, the central banks (FED in the US, and ECB in Europe) reacted in the same way, albeit at different times. That is, they raised interest rates to “dry up” a large amount of liquidity injected in previous years to cope with the major international crisis of 2008 and 2012.

In fact, the raising of rates by central banks increases the costs associated with borrowing and makes saving more attractive: if the demand for products and services falls, then prices should rise less rapidly, remain unchanged or even fall, thereby keeping inflation under control.

What will happen in 2023? It is always very difficult to make predictions, as there is always the risk of an unforeseen event (the “black swan”) looming over all analyses, as was the case with COVID, which can turn everything upside down, for better or worse.

However, from the information on the central banks' monetary policies, one can at least draw a rough picture. As early as 14 December, for example, a slowdown in interest rate hikes by the FED is expected given the latest US inflation data, which fell to 7.7% after a peak of 9.1% in June, a sign that the inflation rate could slow down with a consequent easing of monetary tightening by the FED.

US dynamics are generally precursors of European ones, so we may see a similar trend for interest rates in the coming months from the ECB, which already pointed out in November that “inflation will start to slow down in the first half of next year and that we may be very close to the peak”^[1].

One point remains, however, which could cause all forecasts to be revised. According to the International Monetary Fund, a share of inflation in Europe cannot be explained based on traditional criteria^[2].

Therefore, inflation in 2023 remains an unknown factor, at least for Europe, and enables the future effects of monetary policies to be defined with certainty.

Geopolitical risks: what will happen in 2023?

International tensions are the other big unknown factor in the coming year. On top of everything, the war in Ukraine is certainly dominating, because a new definition of global geopolitical relations is also expected from its developments.

In a globalized and interconnected world, evolving tensions between China and Taiwan could also have an impact on the European economy, as well as possible catastrophes related to climate change, which could hit at any latitude and generate chain reactions that become global.

Internal country factors will also play a role. The rising cost of living and the deterioration of the labor market will serve to aggravate social inequalities, which will require particularly careful management by governments to avoid destabilizing countries.

The combination of these variables shows that, despite a glimmer of hope, 2023 will still be a complex year, with economic, geopolitical, and financial risks. However, as is now well known, crises also bring with them opportunities. A symbolic example is the ecological transition, stimulated precisely by the war in Ukraine, which has consolidated the need to move away from fossil fuels to produce energy.

Therefore, managing uncertainty, which has become the dominant feature of the new millennium, may be the key to facing the new year on the investment front.

^[1] https://www.ansa.it/sito/notizie/economia/2022/11/24/bce-ipotesi-stop-a-rialzi-dei-tassi-se-ci-sara-una-recessione-profonda_838592d8-a928-434f-9e5a-97060da3ff6c.html

^[2] https://www.imf.org/en/Blogs/Articles/2022/10/23/europe-must-address-a-toxic-mix-of-high-inflation-and-flagging-growth

Against the backdrop of stagflation, which is causing investors to reorient their portfolios, there is already an increased demand for bond instruments, with signs of focus on government bonds in particular.

Inflation rates taking the eurozone back to the 1980s^[1], interest rate hikes by central banks, and downwardly revised growth estimates^[2] are creating a new scenario for the global economy, which is overshadowed by the uncertainty surrounding the conflict in Ukraine and rising energy costs.

After years of subdued inflation and relative stability on the geopolitical front, investors are navigating these profound new changes: on the one hand, they are seeking to deduct their savings, which have grown during the pandemic years, and returns from the erosion of purchasing power produced by inflation, while on the other hand they may be disoriented about investment opportunities in a global economy exposed to the risk of stagflation.

It will take a few months to understand investors’ asset management choices and whether the desire to seek refuge in investments considered safe will prevail, but in the meantime bonds, in which there is growing interest, are a harbinger of things to come.

What are bonds

Bonds are securities that give the investor the right to receive, at the contractually defined maturity, a reimbursement of the sum paid in and remuneration by way of interest, called a coupon. The issuer may be the state or another public entity (government bonds), a bank or company (corporate bonds), or supranational bodies (supranational bonds).

The bond in fact represents a debt for the issuer because it uses the sum received for financing.  On the contrary, for the investor, it is a credit, which can be acquired on the primary market, i.e. at the time of the first issue, or on the secondary market, i.e. subsequent to the issue, from whoever has already bought them (in the latter case, the purchase takes place at the market price).

The world of bonds is very broad, encompassing various types of bonds depending on how and when principal and interest are repaid.  The coupon, for example, can be either fixed-rate, when it periodically guarantees an amount of interest determined in advance, or variable-rate, when the interest paid depends on financial, real (inflation rate), or currency (exchange rate) indices.

However, bonds are always structurally different from shares: as debt securities, they give the right to receive a coupon for the money lent, in addition to the return of the principal at maturity. With shares, one participates in the risk capital of the company, becoming its owner for the share held: if the company does well, the value of the share goes up, and vice versa.

This does not mean, however, that bonds are risk-free: for instance, the issuer may have solvency problems and be unable to repay its debts.

Inflation effect on bonds

As always, when it comes to financial markets, there are many factors and variables to consider, and it is not possible to make firm predictions even concerning the impact of inflation on bonds.

In a very intuitive way, it can be said that for those borrowing the money (the bond issuers) the increase in the cost of money entails an additional burden, whereas those who lend money by acquiring bonds should theoretically benefit from higher yields.

We have to use conditional because there may be mixed effects, which also depend on the type of bond.
Rising interest rates in particular result in new bond issues having a higher yield than those already in circulation, which is why the price of the latter falls. “If the bond is held to maturity,” explains Morningstar analysts^[3], “it will be redeemed by the issuer at par and the subscriber can invest the proceeds in new bonds with higher yields”.

On the other hand, inflation is an “enemy” for fixed income investments, e.g. fixed coupon bonds, where regular interest payments remain fixed until maturity, exposing the yield to erosion of purchasing power.   

That is why there is no single answer as to the impact inflation can have on bond investments. There are also differences between long-term and short-term bonds. Since early 2022, Morningstar again noted a greater penalty for the Euro long-term bond category than for short-term funds, which were less affected by rising rates.

Source: Morningstar Direct. Figures in euro as of 30 August 2022. Base 100 euro.

Increase in bonds in a portfolio

Notwithstanding the difficulty of predicting how the financial market will evolve in light of the current economic conditions, the signals coming from investors tend to lean more and more toward bonds.

According to Morningstar’s latest analysis of European flows,^[4] investors returned to bond funds, after outflows in the first part of 2022. Net inflows in Europe amounted to euro 10 billion, with investors focusing mainly on euro corporate bonds, global bonds hedging currency exposure in US dollars (USD hedged), euro government bonds, and emerging market bonds.

The reason is mainly related to the desire to control risk: compared to shares, bonds generally have much more stable performance, even when interest rates rise^[5].

Source: Morningstar Direct, 31 July 2022

Morningstar analysts explain that^[6] “since 1926, for example, equities have suffered 119 quarters of negative returns. In about two-thirds of these periods, bonds recorded positive returns. Moreover, the extent of losses for bonds was generally much smaller”.

Investors are likely to see bonds as a way to weather a possible recession, in an environment where rising interest rates in both Europe and the US may create yield opportunities.

This is why experts expect a new season for bonds, with investors looking for solutions to diversify and optimize their portfolios.

^[1] https://formatresearch.com/2022/10/19/eurostat-inflazione-annua-area-euro-fino-al-30/#:~:text=L'inflazione%20annua%20dell'area%20dell'euro&text=L'inflazione%20annuale%20dell'Unione,ufficio%20statistico%20dell'Unione%20europea.

^[2] https://www.weforum.org/agenda/2022/08/eurozone-economy-economic-outlook/

^[3] https://www.morningstar.it/it/news/226235/rialzo-dei-tassi-quale-impatto-sui-fondi-obbligazionari.aspx

^[4] https://www.morningstar.it/it/news/226948/perché-gli-investitori-sono-tornati-sulle-obbligazioni.aspx

^[5] https://www.morningstar.com/articles/1084518/what-do-rising-interest-rates-mean-for-diversification

^[6] https://www.morningstar.it/it/news/226235/rialzo-dei-tassi-quale-impatto-sui-fondi-obbligazionari.aspx

The fund invests in companies providing digital technologies, such as those developing and providing cloud computing, but also related to Cyber Security and Artificial Intelligence. 

The transition from the analog to the digital world is bringing new challenges such as digital literacy and opportunities for growth. Traditional economic spheres, such as manufacturing, were among the first to tap into the potential offered by digital technologies. For instance, they launched Industry 4.0 projects, in which normal production processes in sectors of the so-called Old Economy (think of the steel industry) have found new development potential thanks to the application of the Cloud or the Internet of Things.

On the job front, too, new profiles have emerged, linked to the use of digital technologies. Just think of Big Data analysts, figures that have arisen precisely due to digitalization, which makes it possible to accumulate a large amount of data for analysis.

Then, with COVID, we started talking about phygital, to denote the mixing and coexistence of physical and virtual spaces.

Every transformation brings with it uncertainties but also many opportunities. In this respect, digital technologies represent an added value that can regenerate traditional sectors of the economy and open up new growth scenarios, which were unimaginable before this revolution. The potential is still to be explored because the digital transition has in fact only just begun.

However, NOVIS, a European insurance company, is already ready to seize the opportunities opened up by this new revolution, providing investors with solutions to diversify their portfolios through digital assets.

NOVIS Digital Asset: what it is and how it invests

In response to the ongoing digital transition, in 2017 NOVIS created the fund Digital Asset, an internal, non-guaranteed fund that invests in investment funds or exchange-traded funds (ETFs) focused on shares of companies that develop and provide cloud computing or, in general, companies in the technology sector, with no geographical limits.

Why the focus on the cloud? The data shows that this information technology, which allows the Internet to be used to distribute software and hardware resources remotely, is among the most attractive to private companies and government bodies at all levels. According to Eurostat^[1], 41 percent of European companies used the cloud in 2021, compared to 36 percent in 2020. The growth trend is, therefore, positive, but there is still ample room for growth for one of the digital technologies considered strategic by the European Union, as a productivity factor for companies.

The long-term objective of the NOVIS fund is to achieve a return over the long term that is significantly higher than the inflation rate. In order to have the necessary liquidity, the Fund may invest a limited amount (up to 20%) in bank deposits in banks located in countries of the European Economic Area.

The return of NOVIS Digital Asset is linked to the performance of the three underlying, which make up the portfolio.

Cybersecurity, Cloud and Artificial Intelligence in the underlying of NOVIS Digital Asset

ETFMG Prime Cyber Security ETF (HACK™)^[2] comprises a portfolio of companies providing cyber security solutions, in terms of hardware, software, and services.

This is the first ETF targeted at the cyber security industry, a sector that is estimated to reach $345 billion by 2026^[3], as global digitization will also lead to increased demand for security.

The fund portfolio offers good diversification across equity capitalization, geographic distribution, and business focus.

The ETF seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the Prime Cyber Defense Index, a benchmark that tracks the performance of companies operating in cyber security technologies and services. 

The second underlying asset is First Trust Cloud Computing ETF^[4], an exchange-traded fund that seeks investment results that match the price and yield – before fees and taxes – of the ISE CTA Cloud Computing™ Index.
This is a modified equal-weighted index (calculated by averaging the percentage change of each of the listed stocks included in the group, regardless of their market capitalization or economic size) defined to replicate the performance of cloud computing companies. To be included in the index, a security must be classified as a Cloud Computing company by the Consumer Technology Association (CTA) and have the following criteria:

minimum market capitalization of USD 500 million;

minimum free float of 20%;

minimum daily trading volume in three months of USD 5 million.

Finally, the third underlying is the Global X Artificial Intelligence & Technology ETF, the ETF^[5] that gives investors access to companies with high growth potential engaged in the development and use of Artificial Intelligence technologies in products and services and companies that provide hardware to facilitate the use of AI for Big Data analysis.

The fund seeks investment results that match the price and return performance (before costs and fees) of the Index Artificial Intelligence & Big Data Index.

The structure of NOVIS Digital Asset’s portfolio changes over time depending on market conditions: in any case, the aim is to tap into emerging opportunities through digitization in order to diversify investments.

^[1]

https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Cloud_computing_-_statistics_on_the_use_by_enterprises

^[2] https://etfmg.com/funds/hack/#footnote-c-8

^[3] Alpha: https://seekingalpha.com/article/4476837-hack-etf-cybersecurity-stocks-to-ring-in-new-year

^[4] https://www.ftportfolios.com/retail/etf/etfsummary.aspx?Ticker=SKYY

^[5] https://www.globalxetfs.com/funds/aiq/

The digital transition is also impacting the insurance-financial sector, changing the relationship between companies and customers and opening up new investment opportunities. 

Digitization has spread extensively and successfully reached every sphere of economic, social, political, and working life in a way that few other phenomena have.

The web, and digital technologies in general, have profoundly transformed how we relate to each other, in every part of the world.  A gradual but inevitable revolution has ensued, further accelerated by Covid. This is because digital technologies were the element that helped to maintain interpersonal relationships, work, and study during the lockdowns. 

The insurance-financial world is involved in this major transformation of society. EIOPA's 2021 consumer trends report^[1] highlights how, across Europe, there has been a shift towards technological innovations throughout the product lifecycle. However, sales and distribution remain the most digitized stages of production.

There are two aspects where digitization will bring about a profound transformation in insurance: relationships with customers, which can be consolidated both in the decision-making phase and in the course of a contract; and the possibility of seizing investment opportunities in digital realities, which are increasingly fundamental to the economic growth of countries.

Digital and insurance: how relationships with customers are changing

According to the ISG Pulse Check-State of European Insurance Industry, 2021^[2] survey conducted by the global consultancy firm Information Services Group, the desire to offer customers a better experience is the main driver for digital transformation. This is reflected in the customization of products and offers, the possibility of accessing solutions directly from mobiles, and the simplification of contact points between operator and customer.

Simplified processes throughout the product lifecycle, possible lower long-term costs leading to greater financial inclusion, wider choice, product customization, more efficient claims handling, and increased service options: these are just some of the possibilities that digitization brings to the insurance-financial world, benefiting the relationship with potential and existing customers.

On the other hand, digital take-up opens up new challenges. Information, opinions, and personal experiences move quickly on social networks, forums, and chats, and reach “readers” all over the world. This helps to consolidate public opinion on a company, a product, or a service, regardless of whether one is a customer and whether the operator in question has an online presence.

It is a challenge for companies because it requires more effort than it used to, so businesses can prove their robustness. On the other hand, it is also an opportunity, because the possibility of communicating relatively directly with one's contacts, both real and potential, helps to shorten the typically perceived distance of operators in the insurance-financial market, laying the foundations for improved relationships of trust.

Digital economy, new investment opportunities

The use of digital has now also become central to the world of production. First large companies, then, in turn, SMEs, started to introduce specific technologies to streamline production processes and organization, so as to optimize time and costs. At the same time, they applied digital technology to products, successfully consolidating and conquering new markets.

In 2021, according to Eurostat^[3] 94% of European companies with at least 10 employees used a connection to access the Internet. Most European companies have an online presence: 78% have a website, 59% use social media, and 22% sell via e-commerce.

The growth of information and communication technologies (ICT) has the potential to improve services and products as well as to increase competitiveness. According to Eurostat itself, “it has a profound impact on how business evolves, affecting multiple aspects such as the organization of production, processes for service delivery, internal and external communication”.

Moreover, the digital economy is not only tied to the web but also includes hardware and software tools, which open up new market spaces to highly qualified operators capable of producing digital services and products. Businesses can also benefit greatly from new technologies, in terms of innovativeness and global competitiveness.

At a time when the global economy is overshadowed by uncertainties related to international tensions and the aftermath of the pandemic, the “turmoil” of the digital transition is also generating opportunities for investors who, through investment solutions focused precisely on digital assets, can diversify their portfolios by entering areas with high development potential.

^[1] https://www.eiopa.europa.eu/sites/default/files/publications/reports/summary-of-eiopa-consumer-trends-report-it.pdf

^[2] https://isg-one.com/articles/pulse-check-state-of-the-european-insurance-industry-2021

^[3] https://ec.europa.eu/eurostat/web/products-eurostat-news/-/ddn-20220120-1

Launched in August 2022, the fund responds to the demands of sustainability-conscious investors by allocating capital to clean energy and marine ecosystem entities. 

The global focus on sustainability is one of the main drivers that are transforming the financial and economic world. The realization that the state of the environment also impacts the health and well-being of the global population, as demonstrated by Covid, as well as the countless natural disasters that are occurring as a result of climate change, have accelerated the ESG (Environment, Social, Governance) approach to investing.

It is no coincidence that Europe is building a regulatory framework within which investors and financial operators can move to optimize ESG investment outcomes, combining returns with the ability to impact the environment and society positively.

This framework also includes the activities of NOVIS, an international insurance company, which has always placed great emphasis on sustainable finance.

The company in 2019 launched its Sustainability Insurance Fund, recognizing that everyone can make a contribution to reducing the negative impact of climate change.

From August 2022, in addition to the Sustainability Insurance Fund, the NOVIS Sustainability Plus internal fund has also been available, which offers investors the opportunity to diversify their portfolio by focusing on sustainability.

Sustainability Plus, how the new NOVIS fund invests

NOVIS's new fund focuses on very specific assets, consistent with the ecological transition encouraged at the European level.

First of all, the fund and its investments pursue the goal of sustainability by excluding issuers that are involved in arms production, tobacco, coal mining, oil extraction or unconventional gas. Also excluded are issuers classified as violating the principles of the United Nations Global Compact.

In addition, the fund invests directly or indirectly in shares or bonds that meet the following requirements and rules:

at least 45% of assets in energy-related companies without negative impacts on the environment (clean energy), such as the release and emission of greenhouse gases into the atmosphere like carbon dioxide;

in addition, at least 45% of activities are invested in the sustainable use of marine resources for economic development, improved livelihoods and employment, and preserving the well-being of the marine ecosystem (blue economy).

Clean energy: iShares Global Clean Energy UCITS ETF

This is an exchange-traded fund (ETF) managed by BlackRock Asset Management Ireland Limited and aims to replicate as closely as possible the performance of the S&P Global Clean Energy Index, an index that measures the performance of approximately 100 of the largest publicly traded clean energy companies globally that meet specific investment eligibility requirements and ESG exclusion criteria.

According to the Morningstar Sustainability Rating^[1], which assesses how well portfolio companies are managing ESG risks compared to other funds in the same Global Category, IShare Global Clean Energy has a rating of 4 out of 5.

The fund invests in companies involved in clean energy production or the provision of green energy technologies, both in developed countries and in emerging markets. Companies that exceed their emissions from coal use are excluded.

Being linked to specific sectors, countries, currencies and companies, the fund is more sensitive to localised events related to the economy, the market, politics and regulation.
 Geographical diversification is, however, broad.

Since its launch in 2007, performance has been stable, with growth after 2020.

Blue economy: ECPI Global ESG Blue Economy

Managed by BNP Paribas Asset Management Luxembourg, part of BNP Paribas, the fund seeks to replicate the performance of the ECPI Global ESG Blue Economy (NR) Index by investing in stocks of companies best organized to take advantage of opportunities offered by the sustainable use of ocean resources (coastal protection, eco-tourism, recycling, human capital) with a positive ESG rating.

The type of approach implemented is thematic: the target companies provide products and services that provide comprehensive solutions to specific environmental and social challenges, seeking to produce benefits for future growth in these areas, contributing capital to the transition to a low-emission and inclusive economy.

The Morningstar Sustainability Rating^[2] gives a score of 3 out of 5.

Over the past five years, the cumulative performance has been as follows:

Energy and the marine ecosystem are two cornerstones of the approach to sustainability that is driving the ecological transition globally, designed to create favorable conditions for the growth of companies dealing with these two topics.

Therefore, the new NOVIS fund can represent an opportunity to diversify the investment portfolio by seizing opportunities that emerge internationally. 

^[1] https://www.morningstar.it/it/etf/snapshot/snapshot.aspx?id=0P0000M64O&tab=0&reportLang=it

^[2] https://www.morningstar.it/it/etf/snapshot/snapshot.aspx?id=0P0001KTZ0