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Dutch households suffer large losses on investment fund positions
Published: 30 November 2022
Dutch households suffered large losses on investment funds in the first three quarters of 2022, DNB figures show. Falling stock market prices and rising interest rates reduced the size of investments in funds by €18.3 billion (-15.9%) to €97.3 billion in the first nine months of this year.
The drop in value of investment fund positions seen so far in 2022 is the largest ever measured, both in relative and absolute terms. DNB has been keeping these statistics since 2009. The drop comes on top of losses on direct equity investments which Dutch households have already suffered this year.
The decline in household investment in investment funds has been consistent throughout the year thus far. After peaking at €115.6 billion at the end of 2021, the volume of these investments shrank by €5.9 billion in the first quarter of 2022, followed by a €10.3 billion decrease in the second quarter and a €2.1 billion decrease in the third. The current September 2022 volume comes to €97.3 billion and is similar to that in December 2017.
Biggest decline in equity funds
By the end of September 2022, Dutch households had invested €97.3 billion in domestic and foreign investment funds. These investments are mainly in equity funds that have global asset allocations, with invested assets of €35.4 billion (36.4% of total fund positions). Besides other equity funds and mixed funds, positions in bond funds are also sizeable at €20.7 billion (21.3% of the total). The majority of the investment funds most commonly invested in are domestic funds.
While the value of bond funds declined by a total of €1.8 billion (-8.5%) in the first three quarters of 2022, losses on all equity funds were particularly sizeable at €12.5 billion (-20.0%). This is true especially when compared to the leading MSCI World Index, composed of over 1,500 stocks from 23 countries, which lost ‘only’ 14.6% over the same period. A better measure by which to put equity fund losses in context is the AEX index, which lost 19.7% in the first three quarters of 2022.
Also in the third quarter of 2022, the decline in households' invested assets consisted mainly of losses on equity funds of €3.7 billion (-7.1%).
Besides investments in funds, households saw the value of their equity portfolio decline by €11.9 billion to €50.3 billion (-19.1%) during 2022.
Purchases and sales of investment fund positions
Throughout the first three quarters of 2022, purchases and sales of investment fund positions almost cancelled each other out (€79 million in net purchases). Interestingly, July 2022 saw households selling positions in investment funds en masse: a total of €536 million was sold on balance this month. This coincides with the period in which the ECB raised its key interest rate for the first time.
Such outflows from investment funds are exceptional. Net investment fund sales were higher only in March 2020, when the COVID-19 pandemic broke out, at €629 million. In 2021, households actually made relatively large net purchases of investment fund positions totalling €3.6 billion. Compared to this figure, the 2020 net sales of €343 million were relatively minor.
Household investment fund positions viewed in perspective
According to figures from Statistics Netherlands (CBS), the Netherlands has 8.1 million private households. Of these, 1.9 million hold investments, according to the Dutch Authority for the Financial Markets (AFM). In the third quarter of 2022, total investments in securities (listed equities, investment fund units and bonds) amounted to €152.7 billion. Investment fund positions accounted for 63.7%. In contrast, total Dutch households savings amounted to €422.5 billion.
Besides investment fund units (€97.3 billion), Dutch households held €50.3 billion in listed shares and €5.0 billion in bonds. Dutch households also hold substantial assets with pension funds and insurers and in the housing market; these assets have been excluded here.
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