As foreign investors increase their exposure to Dutch small and mid caps, Hilco Wiersma (pictured), manager of the Add Value fund specialising in Dutch small and mid caps comments on the prospects for Dutch equities.
Throughout last week, both UBS, Norges Bank and LSV Asset Management increased their exposure in ASMI, Besi and Delta Lloyd respectively.
According to Wiersma, this indicates that international investors are becoming aware of the growing attractiveness of Dutch small and mid caps.
“We observe time an again that international institutional investors select Dutch listed technology stocks on a large scale. I believe that 75% to 80% of Dutch of the Dutch small and mid caps are currently owned by foreign investors. Why are Dutch institutional investors continuing to look abroad while these attractive valuations are just around the corner?” he asks.
Wiersma also points out that other international investors with an active approach to stock picking, such as Fidelity and Norges Banks have increased their exposure to Dutch stocks.
“Due to growing corporate profits and improvements of pay out ratio’s, dividend returns are at historically high levels. Strong results throughout the first quarter and the gradual slowdown of growth since mid-April have contributed to the fact that Dutch small-and mid caps are increasingly undervalued, both compared to large caps and compared to other European or American small and mid caps. We estimate that the current discount ranges between 25% and 45%” he argues.