Mon, 29/10/2007 - 05:58
The Netherlands has a formidable asset in the global market for cutting-edge financial services with the strength and size of its pension funds and other institutional investors, but it risks being sidelined as an investment centre unless institutions throw support behind domestic managers, according to leaders of the country's hedge fund industry.
Former foreign minister Bernard Bot, who has just become chairman of a Dutch hedge fund management firm, argues that the Netherlands risks being bypassed in the asset management field unless active steps are taken to harness its pension resources to develop a domestic investment industry able to compete on a world scale.
'The recent ABN Amro takeover process clearly demonstrates that we may be losing vital financial skills, which has profound implications for future economic growth and jobs in the Netherlands,' Bot says.
'We should therefore explore whether we can rally our pension funds to support the development of a world-class Dutch investment industry by ring fencing capital for domestic managers. I have recently taken up a position with Finles Capital Management, an alternative investments manager in the Netherlands, to allow me to pursue this campaign further.'
The Dutch pension funds market is the second largest in Europe after the UK and commands around EUR1trn in assets under management, including pension money held by insurance companies, and some of these funds are among the biggest in the world. But much of the capital invested by Dutch pension funds is placed with investment managers outside the Netherlands.
By investing more domestically, institutional investors would benefit from the high level of financial services and regulatory support in the Netherlands, the Dutch legal structure, direct local knowledge skills transfer and education, the proximity of managers and the same language and business culture, Bot says.
Utrecht-based Finles Capital Management in Utrecht is one of just a handful of Dutch hedge fund managers and has a 30-year history alternative investment. 'Finles invests extensively in hedge fund managers around the world, as they are the innovators in investment management skills,' says chief executive Rob van Kuijk.
Finles manages a family of funds of hedge funds with combined assets of USD350m and was the first firm to offer a performance fee-only fund of hedge funds in the Netherlands. Says Van Kuijk: 'We would like to place more capital with Dutch managers, provided they show the investment performance and have the expertise to justify this, though at the moment there are not many to select from.'
Bot's call for greater investment management activity in the Netherlands has been endorsed by Clayton Heijman, the Alternative Investment Management Association council member responsible for the Netherlands. 'We fully support Bernard Bot's call for the further development of a pro-active and dynamic Dutch investment industry,' says Heijman, who recently took up a non-executive position as chairman of the supervisory board of Finles' funds.
'New legislation has done much to improve the competitiveness of the Netherlands as a domicile for investment managers and we would like to see more Dutch hedge funds being established. A growing investment management industry is a catalyst for growth in other sectors.'
Heijman, a former executive director for the financial institutions group at Fortis Bank, says the Holland Financial Centre, an initiative that groups banks, insurers, pension funds, trading firms, asset managers and other financial service firms, is a good example of the ability of the domestic industry to co-operate to strengthen the position of the Netherlands as a financial centre.
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