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Ahead of the marcus evans European Pensions & Investments Summit  2017, 
Rolf Belonje and Michel van den Akker discuss what the Dutch mortgage 
market can offer to long-term investors that no other market can

Rolf Belonje CEO, Dutch Mortgage Portfolio Management (DMPM) 

Michel van den Akker - CEO, Hypotrust, both part of Blauwtrust Group

Why Dutch Mortgages Are a Perfect Match for Long-Term Investors

Recent Delegates
  • CIO, Aargauische, Pensionskasse
  • Director Pensions & Treasury, Inbev
  • CEO, AP Fonden 3
  • CIO, AP Pension
  • CIO, AXA Belgium
  • Group Pensions & Benefits Director, Barclays Retirement Fund
  • Trustee, BT Pension Scheme
  • Director Group Pensions, Deutsche Post
  • Investment Director, Government Pension Fund – Global

     and more…

Copyright © 2017 Marcus Evans. All rights reserved.

Summit Speakers
  • Keith Ambachtsheer, Director, Rotman International Center for Pension Management, University of Toronto & Founder, KPA Advisory Services
  • Ronald van Dijk, Managing Director, Head of Capital Markets, APG Asset Management
  • Jelena Stamenkova van Rumpt, Advisor Responsible Investment, PGGM
  • Janwillem Bouma, Chairman, PensionsEurope
  • Dr Tom Fearnley, Investment Director, Norwegian Ministry of Finance
  • Olivier Rousseau, Executive Director, Fonds de Réserve pour les retraites
  • Hugh Grover, CEO, London LGPS CIV

     and more...

15 - 17 May 2017

Fairmont Le Montreux Palace, Montreux, Switzerland

About Dutch Mortgage Portfolio Management/Hypotrust 

Dutch Mortgage Portfolio Management (DMPM) offers a one-stop solution to foreign and domestic investors in the Dutch residential mortgage market. DMPM acts as a lender of record, portfolio manager and single point of contact to the other Blauwtrust Groep subsidiaries (Quion, Hypotrust and De Hypotheker), to provide marketing and distribution services as well as origination, primary and special services. The investment is a direct investment opportunity in Dutch Residential Mortgages with a margin up to 180 bps over IRS and hardly any credit risk. The Blauwtrust Groep service a portfolio of EUR 60bn, is rated by Fitch (RPS 2+/RSS 2+) and ISAE3402 and ISO 27001 certified.

 www.dmpm.nl 

“Dutch mortgages fit perfectly with the needs of long-term investors,” says Rolf Belonje, CEO, Dutch Mortgage Portfolio Management (DMPM). “CIOs have to realise that investing in mortgages is for the long-term, but that there is a premium for that illiquidity. However, they must select mortgages in the right country to get a positive outcome from risk and yield, and the Dutch market is the best one to get those ratios for them,” adds Michel van den Akker, CEO, Hypotrust.

DMPM and Hypotrust, both part of the Blauwtrust Group, are attending the marcus evans European Pensions & Investments Summit 2017, in Montreux, Switzerland, 15 - 17 May.

What makes Dutch residential mortgages an attractive asset class for pension funds?

Belonje: Around 90 percent of Dutch people today choose an interest period of 10 - 20 years for their mortgages, which is a perfect match for insurance companies and pension funds. They have liabilities and this asset class matches perfectly from a duration perspective.

During the financial crisis, Dutch mortgages performed very well. There are a few reasons for that. The Dutch are very willing to pay their mortgages, they have savings and there is a government safety net to cover most of the losses. The guarantee covering 90 percent of losses to mortgages up to EUR 245,000 does not exist anywhere else in the world. Even in the crisis Dutch mortgages performed very well with almost no losses. If we compare returns with government bonds, Dutch mortgages return twice as much. Now banks are even planning to reduce the interest rate for savings to zero. From all three angles, Dutch mortgages are a perfect match for long-term investors.

What are some of the intricacies of the Dutch residential mortgage market that investors need to know about?

Van den Akker: Interest rates are very low at this moment, compared to ten years ago, making houses and mortgages more affordable. Around 90 percent of all new mortgages sold in 2016 had an interest rate period of ten years or longer. So for long-term investors, the match they can make with their investments and hedging with the duration of the mortgages is something they must know.

Belonje: The banks in the Netherlands that were required to have large mortgage books, cannot have that anymore, especially for the longer interest periods. In a way they are penalised when they give out mortgages for 20 years, so they cannot match that with their books. That is an opportunity for foreign investors, pension funds and insurance companies that are looking for this type of asset class for this duration.

The Dutch Central Bank projects this market to growth in the coming years. It is a large market and we expect more foreign investors to step in without any rejection from Dutch parties because they are involved in other ways.

What advice do you have on risk mitigation? 

Belonje: Of course there is credit risk, but on Dutch mortgages this is traditionally very low. The illiquidity of the asset can be risky, but you get an attractive premium for that illiquidity. If the yield on mortgages drop, that would be an issue, but on the other hand the mortgages you already invested in often have a fixed rate period of 10 or 20 years so you have a fixed coupon. On new mortgages you can decide at any time to originate any further or not. The only risk is of another asset class with the same characteristics outperforming Dutch mortgages. 

Van den Akker: If you add up all the numbers of what institutional investors have liquid, the Dutch mortgage market is actually more liquid in terms of the volume of transactions it can absorb. Although the opportunity is very interesting, investors must select the right partner to make sure that their investment reaches the Dutch consumer and that they make the yield. It is a very important factor.  

About the European Pensions & Investments Summit 2017

The 17th annual European Pensions & Investments Summit is the ultimate meeting point, bringing elite buyers and sellers together. The Summit offers regional pension investors and international fund managers and consultants an intimate environment for focused discussion of the key new drivers shaping institutional asset allocations. Taking place at the Fairmont Le Montreux Palace, Montreux, Switzerland, 15 - 17 May, the Summit includes presentations on global economic trends, mastering private equity, exploring real estate opportunities and implementing socially responsible policies.

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