There has been a lot of talk of the 'Magnificent Seven' stocks which have driven the S&P 500 recently but over the past three years this index has only returned 21.5 per cent.

Meanwhile, Italy's blue-chip index, the FTSE MIB, has returned 27 per cent. The Dax in Germany has returned about 21 per cent and the FTSE 100 has returned 17.6 per cent, in comparison.

Talk about your dolce vita.

Obviously none of the allocators in our database have a specific exposure to Italy but we thought we would have a look at how the most popular European funds in our database are seeing things. 

And it turns out that one of the most popular European funds in our database also happens to have the largest allocation to Italy in the whole of the IA Europe ex-UK sector.

As at the end of 2023, Montanaro European Income fund had a 24.96 per cent weighting towards Italy. For context Italy makes up less than 5 per cent of the MSCI Europe ex-UK index.

The fund is £203m in size and invests primarily in small and mid-cap companies across the continent. 

Montanaro's Alex Magni explained the team’s rationale: “At Montanaro we build portfolios on a stock-by-stock basis. We look for high-quality businesses which we can own for long periods of time.

“In this regard, Italy is home to a number of truly excellent companies, and we have found it a rich seam of new ideas for our fund. 

Though Italy makes up its largest weighting in terms of geographic allocation, just three of its top 10 holdings are Italian. These are pharmaceutical Recordati, grid operator Terna-Rete, and sports equipment provider Technogym.

Magni said: "As we exited the pandemic years, we felt that some of our legacy holdings had not performed as well as we’d hoped, for which we found compelling replacements among our Italian candidates.” 

He added that while avoiding the temptation to make sweeping generalisations about the Italian bourse, it does provide access to some world-class mid-cap companies, which suit Montanaro’s needs. 

Despite its smaller size, the fund is held by four allocators in total. Montanaro European Income excepted, our DFMs have mostly stayed away from European funds with high Italian exposure.