Absolute return has never been a hit in the Netherlands, but during the second half of this year, the number of investors not invested in the asset class has crept up to 57%. An even more dramatic move can be observed in Belgium. Absolute return has turned from the most popular asset class to one of the most unloved: 50% are now not invested in absolute return funds, the highest number ever. In most of the rest of Europe, in contrast, appetite for absolute return is as strong as ever. Especially Germany, Switzerland and southern Europe just can’t get enough of it.
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Being in control
So where does this aversion come from then? Besides the regulatory constraints stopping many pension funds and insurance companies in the Netherlands from investing in absolute return (in Denmark, which also has a large institutional sector, there is also little appetite for the asset class) and worries about costs and non-transparency, many fund selectors in the two countries seem to prefer keeping control over their own asset allocation.
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The Dutch and the Belgians are Europe’s most enthusiastic users of index trackers. And in both countries, it turns out, fund selectors and portfolio managers value their use as tools for tactical asset allocation.
Moreover, the Dutch and Belgian dislike of absolute return coincides with an aversion to unconstrained bond funds, which take control of the asset allocation process away from investors. The Dutch are especially outspoken: more than six in 10 are not invested and just 10% are planning to increase exposure to the asset class. Both numbers are significantly higher than the Pan-European average.
Click here for a full overview of all forward-looking investment sentiment data for the Netherlands.
Unfortunately, a similar overview for Belgium is not yet available…
