EUROPE - Inflation will be high on the agenda for a long time, and might rise to 4% or even 5% at the end of next year, George Möller, executive chairman of asset manager Robeco forecasted.

"For the long term I am even more worried," Möller added, while referring to the rising consumption of an increasing world population which is already causing rising food and commodity prices.

In Möller's opinion, the ECB's task of tackling inflation will become much harder, because many price rises are caused by developments outside Europe.

"However, the long-term interest rates must ultimately rise as well,"  Robeco's CEO predicted during the presentation of the 2007 figures.

So far, Dutch citizens do not seem to be much concerned about inflation yet, as a survey by Tilburg University for Robeco suggested.

According to Möller, institutional investors should respond to inflationary pressure by increasing their allocations to fast growing emerging countries, as well as to inflation-linked products and asset-liability matching.

Countering of inflation should also be sought through investments in scarce resources, technologies for increased efficiency and alternative energy sources, he indicated.

Möller urged the government to keep on developing the pension pooling vehicle API beyond the basic concept.

"The API must also provide for additional arrangements to defined contribution schemes, such as guarantee arrangements before final retirement. Otherwise the vehicle will still loose out to foreign competitors," he explained.

Rotterdam-based Robeco reported a 2.9% growth of assets under management to €146bn and a net profit of €200m.

Last year, the company opened a Hong Kong office, which will operate as its regional headquarters for mainland China, Taiwan and South East Asia. Its task will include pension fund management and distribution, Robeco said, while adding that it is still looking for a joint-venture partner in China.

Through a joint-venture with local Canara Bank, Robeco obtained access to India's 30m customers, including public sector pension funds.

However, it decided to sell its loss-making fixed income activities (RIM) in the US for €5bn to Morgan Stanley Investment Management and Lehman Brothers. Instead it will focus on equity investments en hedge funds, Möller made clear.