Investment funds increase equity investments

Statistical News Release
Date 19 May 2014

In the first quarter of 2014, invested assets of Dutch investment funds grew by 2.5% (EUR 16 billion) to EUR 660 billion, mainly owing to price gains. New deposits showed a shift from bonds towards equities. Partly as a result of this, investments in equities rose 4%.

The increase in assets under management was attributable to net deposits, price gains, and the fact that a number of existing private equity funds were included in the investment fund statistics. These factors taken together lifted assets under management of investment funds to an unprecedented level of EUR 660 billion (Figure 1).

Figure 1 - Investments of Dutch investment funds.

Net new deposits in the first quarter of 2014 were relatively small at EUR 1 billion (0.2% of assets under management), relative to EUR 6 billion in the previous quarter.  New deposits were made primarily by institutional investors.  Households once again withdrew money from investment funds (down EUR 0.6 billion, 3% of their total holdings).
The different asset classes showed a mixed picture. Institutional investors made portfolio adjustments: equities and real estate were favoured at the expense of bonds in particular. This reflects increasing risk appetite and an upturn in economic sentiment. On balance, money flowed into equity (EUR 4.9 billion) and real estate funds (EUR 0.9 billion), while capital was withdrawn from bond funds (down EUR 1.7 billion), mixed funds (down EUR 0.4 billion), hedge funds (down EUR 0.7 billion) and other funds (down EUR 1.8 billion). This trend is contrary to the one observed in the previous quarter when capital flowed into fixed-income funds (EUR 4.4 billion) and was withdrawn from equity funds (down EUR 2.9 billion), see Figure 2.

Figure 2 - Deposits into Dutch investment funds by investment category

The biggest contribution to the increase in investments was delivered by positive revaluations, totalling EUR 9 billion (1.4% of assets under management). Quarter-on-quarter price gains of 2.0% and 1.0% were achieved on bonds and equities respectively. This is in line with bond indices, and with the MSCI World Index in euro for equities (0.7%). Price gains on equities were dampened by price drops in emerging markets and Asia (Japan in particular).  Equity funds investing in these economies consequently posted negative returns (down 0.9% for emerging markets and down 3.2% for Asia).  Total returns of all investment funds (including investment returns like interest and dividend) came to 2.0% in the first quarter of 2014, relative to 1.8% in the previous quarter.
The remaining increase in investments (EUR 6 billion, 0.6% of assets under management) was attributable to the inclusion of a number of existing private equity funds in the investment fund statistics. This was related to the expansion of the definition of ‘investment fund’ as applied in the statistics compiled for euro area investment institutions. As a result, assets under management of Dutch private equity funds included in the investment fund statistics came to EUR 16 billion.