Sharp increase in Dutch investment funds’ total net assets in 2009
Dutch investment funds’ total net assets nearly doubled in 2009 to just under EUR 400 billion. This was accounted for by several large pension funds depositing EUR 174 in investment funds specially founded to this end, which until then they had managed themselves. Besides this incidental deposit, the increase in total net assets also reflected reviving stock markets (plus EUR 42 billion) and a recovery of regular net deposits (up to EUR 5 billion). Especially real estate and equity funds were in favour. Insurers, however, withdrew money from domestic funds. In 2009, aalso households preferred to lay by money in savings deposits (accounting for 5% growth) and put money into foreign equities (growth: 14%). As a result of the incidentally high deposit in 2009, Dutch investment funds’ total net assets rose to the fifth position in the euro area.
Increase in pension assets’ management via mutual investment funds.
As at 31 March 2010, Dutch pension funds’ investments stood at nearly EUR 700 billion. While in 2002, pension funds still managed some 40% of their investments themselves, last year in particular that share fell sharply, to 10%. With a view to achieving economies of scale and a more efficient use of specialist know-how, in 2009 mutual investment funds were founded, i.e. in-house funds of pension funds to which also other institutional investors outsource the management of their investments. End of 2009, EUR 330 billion was invested in Dutch units. In 2009, little changed in the eventual investment mix of pension funds themselves and their mutual investment funds. Investments remained largely focussed on foreign securities (86%) and bonds (42%).
Interest rate risk for life insurers reduced by means of derivatives
End of 2009, life insurers’ investments amounted to close on EUR 300 billion. To meet fixed obligations to policy holders, insurers chiefly invest in bonds and mortgage loans. In 2009, they augmented their investments in these securities. Through interest derivatives, they also ensured that in the event of an interest rate decrease, their investments would fall less short of what is required to continue meeting future obligations. End of 2009, an interest rate decrease by 1 percentage point would have a negative net effect on own funds to the amount of EUR 2.6 billion, roughly half the effect before the said measures. The other investments by insurers, held for policyholder risk, stood at approximately EUR 100 billion, end of 2009. The corresponding contribution income from unit-linked insurance policies, which were especially popular during the stock market boom and years of strong economic growth, has declined sharply in recent years.
Robust growth of Dutch banks’ securities portfolio
Since the outbreak of the credit crisis, Dutch banks' securities holdings, largely consisting of debt paper, doubled to over EUR 400 billion as at 31 March 2010. This was primarily accounted for by banks themselves purchasing debt instruments issued by their own special purpose vehicles for the acquisition of mortgage loans. During the credit crisis, other investors were less interested in this product. Bank holdings of these instruments, which may be used as collateral in Eurosystem lending, quintupled to EUR 250 billion. Also government paper holdings have increased since mid-2009 to some EUR 30 billion (to EUR 117 billion), on account of both purchases and gains. The share of debt instruments on banks’ balances sheets rose to 18%, a percentage that it now comparable to that in other euro area countries.
Decline in transfers by migrant households to overseas relatives
Migrant households transfer income to overseas relatives on a regular basis. In 2009, such transfers totalled approximately EUR 1.5 billion. Amply one-third of this went to Surinam, Turkey and Morocco. Income transfers to Western European countries also amounted to an estimated EUR 350 million. In 2009, transfers from the Netherlands fell lightly; a development that the World Bank is also seeing for total transfers to developing countries. That total, including wages paid to migrant workers from those countries and savings deposits withdrawn in the event of remigration, last year fell from USD 336 billion to USD 316 billion. These amounts are based in part on rough estimates. In the Netherlands, income transfers are estimated on the basis of transfers via money transaction offices (MTOs). In 2009, these transfers accounted for EUR 0.6 billion. This amount is corrected for non-income transfers, and increased with amounts that migrant workers transfer through channels other than MTOs. Since recently, better account is taken within this scope of the standard of prosperity in the country of origin and the number of households from that country.
For more information, please contact Tobias Oudejans (Tel. 020-5243100, 020-5243100, 0652496961) or Herman Lutke Schipholt (020-5242712, 0652496900