After the dip in share prices in the fourth quarter of 2018, this was the third consecutive quarter of positive returns. Returns were generated primarily by price gains on liquid investments. There were also considerable investments in less liquid investments in the past few quarters.
Statistical News Release: Record for investment fund assets thanks to continuing optimism on financial markets
- Statistical news
Datum 19 november 2019
Investment funds’ assets under management reached a new record of EUR 966 billion in the third quarter of this year. This was primarily due to rising equity prices, appreciation of the US dollar and falling interest rates. The funds achieved returns of 3.4%.
Positive returns for nearly all equity funds
Equity funds generated returns of 3.8% in the third quarter. Persistent optimism on US financial markets in combination with an appreciation of the US dollar played a key role in this respect. The Dow Jones Index rose by 1.2% and the US dollar appreciated by over 4% against the euro. There were gains in most other regional markets, apart from equity funds focused on Asia, which fell slightly.
Returns primarily determined by price movements
The performance of all funds was determined largely by movements in price and exchange rates. Only a small part of profits comprised direct investment income, such as dividends and interest. As interest rates fell in both Europe and the United States, bond prices rose. As a result, bond funds generated returns of 4.2%, well above the average of less than one percent over the past three years. With gains of 4.6%, real estate funds, which usually invest in shares of real estate companies, also achieved results that were above average compared to recent years. The other types of funds also achieved positive returns, but these were closer to their normal average of the preceding years.
Shift to less liquid investments
The assets of investment funds have risen strongly in recent years, mainly due to positive returns on investments. Substantial amounts have been shifted to less liquid forms of investment. For example, corporate bonds are considered to be less liquid than sovereign bonds. Over the past three years, as a result of withdrawals, investments in sovereign bonds have been reduced from over EUR 160 billion in 2016, to approximately EUR 100 billion in the third quarter of 2019. However, investments in corporate bonds remained more or less the same, at around EUR 100 billion. At the same time, investments in other funds increased strongly. The other funds category mainly comprises venture capital funds (private equity) and mortgage funds, which are also considered to be less liquid investments. Figure 2 shows that recent years have seen withdrawals from bond funds amounting to EUR 50 billion, with purchases in other funds amounting to EUR 37 billion while the net purchases of equity funds was virtually nil.
Please refer to our statistics website for more information about Dutch investment funds.