The weight of foreign mutual funds on Italian investors' portfolio assets is remarkably high by international comparison. To assess the exposure to potential financial risks, it is necessary to "look through" foreign funds to see what securities the funds invest in. This paper provides an estimate of the composition of Italy's foreign portfolio assets by instrument and issuing country after correcting for securities held by foreign funds.
Taking into account the securities held by foreign mutual funds, Italian investors' foreign portfolio turns out to be even more tilted towards bonds. The composition by issuing country also changes: the United States becomes the main destination country and the shares of the main European countries increase too, while that of Luxembourg, where most foreign funds are domiciled, drastically falls.
