Investment funds in the Netherlands can trace their origins back to the late 1700s and over much of this long history, the industry can claim to have been more equity-orientated than most other European countries. Concentrated in relatively few hands for a long time, the Dutch mutual fund industry has undergone further consolidation since 1990 when the government lifted an informal ban on mergers between insurers and banks.

Today, Robeco, ABN Amro, ING, Delta Lloyd and Rabobank between them control around 90% of the market. Robeco - the largest independent investment management group in Europe - alone represents around 50%. Locally invested funds tend to be favoured by Dutch investors, hence the often heard slogan - It ain't much if it ain't Dutch."

Outside of domestic funds, investors have relatively little choice in accessing the Dutch market. Fund analyst Micropal monitors less than a dozen Dutch invested offshore funds, with SBC's Netherlands Equity Portfolio the largest in terms of funds under management and Commercial Union's PP Dutch Growth the most consistent, gaining a five-star Micropal rating. General European funds rarely have more than the 12% market weighting invested in the Netherlands.

Following a surge of interest in equities in the late 1980s, the domestic market then turned rather more conservative. Some of the enthusiasm has since returned, however, doubtless spurred on by last year's 30%-plus rise in the AEX Index. But caution remains, illustrated by the popularity of the guaranteed fund, whereby investors benefit from any rise in equities while limiting downside risks. Fiscal incentives also mean green funds and a particular type of bond fund are also popular with individual investors.

Total assets of the mutual fund industry rose from Dfl104bn to Dfl117bn last year, despite some evidence of institutional selling of equity funds. In the past institutions wishing to invest in overseas securities had to gain their access via mutual funds. These restrictions have been discontinued, however, and institutions are increasingly using discretionary accounts or investing abroad on a direct basis.

The equity market has started 1997 in much the same vein as it finished last year, but while investment sentiment is largely bullish, there remains some insecurity surrounding the future course of interest rates. David Hunt"