Flash update: the recent events in the US banking sector and the case of Silicon Valley Bank

Giordano Lombardo, CEO and Co-CIO di Plenisfer Investments SGR

Marketing communication for professional investors in Italy


In this brief note, we summarise our view on the recent events in the US banking sector, by answering a few questions  from clients. Then we comment on our current portfolio positioning.


Is Silicon Valley Bank just a bad apple? At first sight, yes. Most of its deposits came from corporates rather than individuals, and the bank was very aggressive in lending to start-up businesses, growing its balance sheet extremely rapidly (+250% from 1Q 2019 to 4Q 2022). Plus, the bank was very aggressive in the management of its balance sheet, taking duration risk. The portion of uninsured deposits at SVB before the bank run was 89% of total deposits.


Is the situation at SVB really unique? No. Leaving aside the reckless behavior of SVB management (complete failure of interest rate risk management) and the incredible lack of supervision on a bank which had close to $250 bln of assets, its balance sheet issues related to the bond portfolio  are not unique to it.  As the usually perma-bearish Nouriel Roubini remarked, US banks are sitting on “$4620bln of unrealized losses with only $2.2 trillions of equity” (CNN, 12/03/2023).


What is the ultimate reason? Recent and past monetary policy.  The current events are a direct consequence of the unusual monetary policy of the last few years.  It is an extreme case of a more generalized problem: unrealized losses on banks’ balance sheet due to a sudden increase in interest rates.  The FED first injected an inordinate amount of money into the economy until 2021. A sizable chunk of this liquidity found its way into the coffers of banks, in the forms of MBS and Treasuries. Then, the Fed said interest rates would remain low for a long time (inflation “temporary”). When it changed its course in 2022 and raised rates rapidly and dramatically, some banks found themselves sitting on significant unrealized losses in the bond portfolios.  


Is the US banking system at risk? No. The US government has stepped in to avoid a more general bank run, with an open-ended promise to make whole all deposits over US$250,000. Disaster has been averted. Beyond this, the numbers of the US banking system are quite solid, even considering the comparison with 2008.  The reserve coverage ratio standing above 200% is higher than in the ‘00s,  which means that banks are well prepared for a possible increase in non-performing loans. Tier1 capital ratio at 13-14%% is very elevated by historical standards (source: FDIC).


What will happen next? A turnaround in monetary policy.  In a sense, we have already had a turnaround in monetary policy.  Just as September’s gilt meltdown forced the Bank of England to back pedal on its announcement of aggressive quantitative tightening, so this crisis has made clear that the Fed’s commitment to quantitative tightening is unlikely to prove robust either. Funding the banks through liquidity measures is not “technically” Quantitative Easing (the Fed is not buying bonds) but it has the same effect:  expanding its balance sheet.


Is the Fed going to reduce rates soon? No. We continue to believe that the Fed is not likely to go to the extreme in its battle against inflation, even if that will mean to engage in financial repression. There is too much debt in the system, both in the private and public sector, and the service of this debt could become unsustainable. If a new crisis will emerge, it will be in the sectors that benefitted most from the zero-rate policy of the past, which are most exposed to the sudden increase in rates.  Any new crisis will be met with the same medicine:  another government backstop, more money-printing, and more currency debasement.

But we are not there, yet. For the time being the Fed is likely to try and keep up to its commitment to keep a tight policy to combat inflation.


How is our portfolio, Plenisfer Destination Value Total Return, positioned? From a broad macro perspective, we believe the unfolding events are bearish for US assets and the US dollar. We also continue to think that a diversification approach based on the traditional 60/40 portfolio is not suited to address the likely continuing volatility.


We continue to focus our portfolio on Asian and European names among the compounders and in the income strategy.  In currencies, we have a large exposure to Euro (45% of the fund). In interest rates, we maintain a steepening strategy on the US yield curve.


Our exposure to gold (8%) may stabilize the performance in the current period of volatility, thanks to its low correlation with the market trends in the major asset classes. We also continue to believe in idiosyncratic equity names, in particular in China and in European industrials


Regarding our positioning towards the US financial sector, we don’t have any exposure in the equity space, and only 1% in a bond issued by the largest and strongest of US banks (JP Morgan).


In Europe, we are exposed to 12% of corporate bonds issued by financials (of which 4,2% in Cocos) and we don’t have any exposure to the stocks of banks. [1]

[1] Holdings / Allocations subject to change. This document does not constitute an investment advice to buy or sell the presented securities. This Fund is not a guaranteed product. Investments bear risks.  You may not recover all of your initial investment. Investment may lead to a financial loss as no guarantee on the capital is in place.



Fund Factsheet - Plenisfer Investments Sicav Société d'investissement à capital variable (SICAV) Luxembourg" - Destination Value Total Return ("Fund" or "Sub-Fund")

Investment Objective and Policy: The objective of this Sub-Fund is to achieve a superior risk-adjusted total return over the market cycle. The goal is value creation through risk-adjusted total return. Achieving long-term capital appreciation and underlying income through a long-term focus on valuation and market cycles is key to achieving the Sub-Fund's objectives. Benchmark: SOFR Index: The Fund is actively managed and references the Performance Fee Benchmark for the performance fee's calculation purpose. The Sub-fund does not use a Benchmark for investment purpose.

Legal structure: UCITS - SICAV

Investment Manager: Plenisfer Investments SGR S.p.A.

Management Company: Generali Investments Luxembourg S.A.

Launch date: 04/05/2020 (share class EUR ACCUMULATION)

Subscription/Redemption process: Valuation day, 13:00 Luxembourg time (T)/ Redemption: Valuation day, 13:00 Luxembourg time (T) + 5

Minimum subscription: € 500,000 share class I; € 1,500 share class R

Currency: USD



Summary Risk Indicator

Fonte: Bloomberg


The summary risk indicator is a guide to the level of risk of this product compared to other products. It shows how likely it is that the product will lose money because of movements in the markets or because we are not able to pay you. We have classified this product as 3 out of 7, which is a medium low risk class. This rates the potential losses from future performance at a medium low level, and poor market conditions are unlikely to impact the capacity of Generali Investments Luxembourg S.A. to pay you.

Be aware of currency risk. You will receive payments in a different currency, so the final return you will get depend on  the exchange rate between the two currencies. This risk is not considered in the indicator shown above.

Main risks of the fund: Interest rate risk, Credit risk, Equity risk, Emerging markets (including China) risk, Frontier markets risk., Foreign exchange risk, Volatility risk, Liquidity risk, Derivatives risk, Short exposure risk, Distressed Debt Securities risk, Securitized debt risk, Contingent capital securities (“CoCos”) risk. Risk of capital loss: This Fund is not a guaranteed product. Investments bear risks.  You may lose part or all of your initial investment. Investment may lead to a financial loss as no guarantee on the capital is in place.

The Fund promotes, among other characteristics, environmental or social characteristics as per Article 8 as per Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector (“SFDR”). The Fund is not an Article 9 as per SFDR (it does not have sustainable investment as its objective. For more information about ESG Strategy and Objective, Biding elements and methodological limits, please refer to the Annex B of the pre-contractual document in the Prospectus or visit the related Sustainability web disclosureat:https://www.generaliinvestments.lu/lu/en/institutional/sustainability-related-disclosure.


List of available share classes and fees


The performance fee is calculated according to the "High Water Mark with performance fee benchmark" mechanism with a performance fee rate of 15.00% per annum of the positive return above the "SOFR Index" (the performance fee benchmark). The actual amount will vary depending on the performance of your investment. Tax aspects depend on the individual circumstances of each client and may change in the future. Please consult your financial advisor and your tax advisor for more details. Please refer to the countries of distribution and the website of the management company to find out if a class is available in your country and for your group of investors.

(#) Based on the latest KID - January 2023.


Important Information


This marketing communication is related to Plenisfer Investments SICAV, an open-ended investment company with variable capital (SICAV) under Luxembourg law of 17 December 2010, qualifying as an undertaking for collective investment in transferable securities (UCITS) and its Sub-Fund, “Destination Value Total Return”, altogether referred to as “the Fund”. This marketing communication is intended only for professional investors in the countries where the Fund is registered for distribution, within the meaning of the Markets in Financial Instruments Directive 2014/65/EU (MiFID) and is not intended for retail investors, nor for U.S. Persons as defined under Regulation S of the United States Securities Act of 1933, as amended.


This document is co-issued by Generali Investments Luxembourg S.A. and Plenisfer Investments.


Plenisfer Investments SGR S.p.A. (“Plenisfer Investments”) is authorized as a UCITS management company in Italy, regulated by Bank of Italy - Via Niccolò Machiavelli 4, Trieste, 34132, Italia - CM: 15404 - LEI: 984500E9CB9BBCE3E272.


The Management Company of the Fund is Generali Investments Luxembourg S.A., a public limited liability company (société anonyme) under Luxembourg law, authorised as UCITS Management Company and Alternative Investment Fund Manager (AIFM) in Luxembourg, regulated by the Commission de Surveillance du Secteur Financier (CSSF) - CSSF code: S00000988 LEI: 222100FSOH054LBKJL62.


Before making any investment decision, please read the Key Information Document (KID) and the Prospectus. The KIDs are available in one of the official languages of the EU/EEA country, where the Fund is registered for distribution, and the Prospectus is available in English (not in French), as well as the annual and semi-annual reports at www.generali-investments.lu or upon request free of charge to Generali Investments Luxembourg SA, 4 Rue Jean Monnet, L-2180 Luxembourg, Grand Duchy of Luxembourg, e-mail address: GILfundInfo@generali-invest.com. The Management Company may decide to terminate the agreements made for the marketing of the Fund. For a summary of your investor rights in respect of an individual complaint or collective action for a dispute relating to a financial product at the European level and at the level of your EU country of residence, please consult the information document contained in the "About Us" section at the following link: www.generali-investments.com and www.generali- investments.lu. The summary is available in English or in a language authorized in your country of residence.


This marketing communication is not intended to provide an investment, tax, accounting, professional or legal advice and does not constitute an offer to buy or sell the Fund or any other securities that may be presented. Any opinions or forecasts provided are as of the date specified, may change without notice, may not occur and do not constitute a recommendation or offer of any investment. Past or target performance do not predict future returns. There is no guarantee that positive forecasts will be achieved in the future. The value of an investment and any income from it may go down as well as up and you may not get back the full amount originally invested. The future performance is subject to taxation, which depends on the personal situation of each investor and which may change in the future. Please liaise with your Tax adviser in your country to understand how your returns will be impacted by taxes. The existence of a registration or approval does not imply that a regulator has determined that these products are suitable for investors. It is recommended that you carefully consider the terms of investment and obtain professional, legal, financial and tax advice where necessary before making a decision to invest in a Fund.


Generali Investments is a trademark of Generali Investments Partners S.p.A. Società di gestione del risparmio, Generali Insurance Asset Management S.p.A. Società di gestione del risparmio, Generali Investments Luxembourg S.A. and Generali Investments Holding S.p.A. - Sources (unless otherwise specified): Generali Investments Partners S.p.A. Società di gestione del risparmio - This document may not be reproduced (in whole or in part), circulated, modified or used without prior written permission.



Plenisfer Investments SGR S.p.A.
Via Niccolò Machiavelli 4
34132 Trieste (TS)


Via Sant'Andrea 10/A, 20121 Milano (MI)
+39 02 8725 2960


Contact us at info@plenisfer.com




VAT n. & Tax ID: IT 01328320328

Belonging to Generali Italian VAT group: 01333550323

Registered to The National Compensation Fund


Please read the KIID as well as the Prospectus before subscribing. Past performance is no indication of future performance.

The value of your investment and the return on it can go down as well as up and, on redemption, you may receive less than you originally invested.

© Copyright Plenisfer Investments onwards 2020. Designed by Creative Bulls. All rights reserved.