Dutch pension fund assets increasingly allocated to foreign investment funds

The Dutch pension funds’ combined share of direct and indirect unit holdings in foreign investment funds went up from 11% to 15% between early 2020 and the end of the second quarter of 2023. This increase is notable, given the decline in the share of holdings in Dutch investment fund units. Part of the explanation is price developments between mid-2020 and mid-2023: the share prices of foreign investment funds rose faster than prices of other investments. As a result, the value of holdings in foreign investment fund units increased by €52 billion on balance. A further factor behind the increase are transactions: pension funds acquired €11 billion in foreign investment fund units on balance in the same period.

Interest in European investment funds is particularly stronger

The volume of pension assets invested in direct and indirect European investment fund holdings outside the Netherlands is still relatively small. However, compared to indirect unit holdings in investment funds outside Europe and direct unit holdings in Dutch investment funds, they are increasing the fastest:

in the second quarter of 2023, their volume was 69% higher than in early 2020. This increase is largely due to pension funds acquiring €9.5 billion in holdings in European investment fund units indirectly, on balance, through Dutch investment funds between mid-2020 and the second quarter of 2023. At the same time, price movements caused a €7.5 billion increase in these holdings.

The volume of both direct and indirect holdings of pension funds in foreign investment fund units grew by more than 20% between the beginning of 2020 and the second quarter of 2023. This is striking, given that the pension funds’ total assets were 3% higher at the end of that period than at its beginning.

It follows from the above that a large proportion of the assets which pension funds invest in Dutch investment funds appears to represent indirect unit holdings in foreign investment funds. In early 2020, 14% of pension fund assets allocated to Dutch investment funds were channelled to foreign investment funds. By the end of the second quarter of 2023, this proportion will have risen to over a quarter of Dutch pension funds' unit holdings in Dutch investment funds.