According to a survey to be published this month by investment consultancy Bureau Bosch, Anglo-Saxon managers have seized the lion’s share of outsourced assets with 44.6 per cent. Swiss managers come a distant second with 2.6 per cent, while German (1.5 per cent) Japanese (0.4 per cent) and French (0.7 per cent) managers are winning only a meagre number of mandates.
The report shows the volume of Dutch institutional assets externally managed increased by 9 per cent between Q1 2004 and Q1 2005 and stands now at €345bn. This compares with externally managed assets of only €95bn in 1993.
Barclays Global Investors remains the largest foreign manager with 12.8 per cent of total externally managed Dutch pension fund assets, with State Street Global Advisors, Merrill Lynch Investment Managers and Goldman Sachs Asset Management all featuring among the top 15 managers of outsourced assets.
The report blames the steady decline in market share of Dutch asset managers on mergers and takeovers. F&C shares are now in the hands of UK-based Isis, while the takeover of PPCC by Merrill Lynch Investment Managers increased Dutch assets in US hands.
But this is not the only reason. The success of Anglo-Saxon fund managers in the Dutch market is attributed to their research capability and innovation of products such as exchange traded funds, enhanced indexing, hedge funds, commodities, private equity and multi-management.
In contrast, the report said that for Dutch players, institutional asset management is frequently a part of total banking activities. It has a low priority and represents a modest contribution to total profits of the bank.
Dutch asset managers are blamed for holding on for too long to balanced mandates, a ‘growth’ style and top-down approach, while the trend shifted strongly to core-satellite, ‘value’ investing and a bottom-up approach.
However, the picture is not all bleak for Dutch investment houses. Ten of the top 15 asset managers in the Dutch pension fund market are domestic outfits. And if mergers and acquisitions are stripped out of the equation, Dutch managers have enjoyed, at €20.6bn, the largest autonomous increase of Dutch pension plan assets of the top 10 managers.
The report adds that the situation is not hopeless for domestic managers as some players are showing a ‘new élan’ and turning up
at conferences to tempt investors with more tailored investment products.
Frits Bosch, managing director at Bureau Bosch, said Dutch asset managers were fighting back with liability-driven investment products, hedge funds and fiduciary management.
These strategies and particularly LDI and fiduciary management, he added, were responsible for the increasing institutional money flows to Dutch managers.
The research found that as pension funds pursue portfolio diversification, structured products, private equity, commodities, real estate, global tactical asset allocation, currency and swap overlays have become popular asset classes and strategies. By contrast, hedge funds are attracting only modest interest.
Liability hedging is listed as a hot issue, with the trend to liability driven investment directing attention to ways of hedging liability risk. Strategies in demand for this purpose include long bond funds, inflation-linked bonds, dynamic cash flow matching, duration matching with interest rate swaps and synthetic products.
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