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Dutch funds book 5% Q4 losses on equities

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  • Dutch funds book 5% Q4 losses on equities

NETHERLANDS - Dutch pension funds lost €9.5bn on the stock markets in the fourth quarter of 2007 on their total equity portfolio of €205bn, says the Dutch central bank (DNB).

In its March statistical bulletin, the DNB attributes the drop to the "continued unrest in the financial markets in the fourth quarter of 2007".

The relative weight of shares in the total investment portfolio declined mainly because of a fall in shares prices of American equity, said the regulator.

To counterbalance this development, pension funds bought €5bn worth of listed equity - profiting from the low share prices - half of which were of American companies.

Fixed income portfolios, worth €241bn, saw an increase in value of €1.3bn, which was topped up with further investments of €2.5bn.

According to the DNB, it is "remarkable" pension funds sold €2.6bn worth of German government bonds and €11bn in bonds over the whole year, despite the asset class' good performance.

Instead, the funds bought €4.7bn worth of American long bonds in the fourth quarter, and €11bn in bonds over the whole of 2007.

Apart from equity and bonds, pension funds also bought almost €5bn in investment funds, mainly in Luxembourg, Ireland and the US.

Around 40% of this new allocation to investment funds, financed mostly by freed-up deposits, was for liquidity funds.

Earlier this month, the regulator had warned pension funds' financial stability has suffered from the market turbulence, though added this week the pension funds have enough liquidity to index pensions to the rate of inflation thanks to favourable stock market results in the years preceding 2007.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

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