Investing in Europe – Go Dutch! *

The former French President, General Charles de Gaulle, once famously said, ‘How can you govern a country that has two hundred and forty-six varieties of cheese?’ The same might be said of Dutch politics. In the recent October General Election, 27 parties contested 150 electoral seats in the House of Representatives, without conclusive result. To call Dutch politics fractured under its tortured system of proportional representation would be an under-statement. The Dutch people may have spoken, but it could take six months or more to work out what they said via a system of highly charged coalition possibilities.

Compared to its politics, Dutch capital markets are a haven of good sense and pragmatic success, but when compared to the behemoth economies of France and Germany, smaller, nimble markets such as the Netherlands are easily overlooked as beacons of progressive stability and long-term value. The Amsterdam stock exchange is the oldest in the world, founded in 1602 by the Dutch East India company and following a series of mergers at the turn of the century created the first pan-European exchange – Euronext, valued at approximately €1.6 trillion, fairly modest when judged against France, for instance (€4.8 trillion) and is home to just 164 companies. In any balanced European and global equity portfolio, the Netherlands should ideally feature, but it is often overlooked as a source of sustainable long-term value, and is seldom ‘over-weighted’.

As investors, we have visited the Netherlands annually for over 15 years, and have built up a deep and informed understanding of just what makes the Netherlands so distinctive and attractive a market for long term investors. The Netherlands, like the UK, is a maritime, outward looking, commerce driven nation, the commercial gateway to Europe, and its companies open and international. The Netherlands, despite its size, is the second largest exporter of agricultural produce in the world, after the United States. The Dutch character, pragmatic, confident but risk-appropriate is exhibited very typically in the quality of management; the Dutch whilst not averse to transformational deals, tend to prefer organic growth or bolt-on acquisitions that are value accretive over the mid to long-term.

Dutch governance, whilst conforming to the European norm of a two-tier Board structure, does not suffer from the sclerosis of German governance, (Boards packed with employee representatives), nor from the state-interventionist peccadillos exhibited in France (Florange). Dutch governance is among the strongest in Europe and sits alongside the UK in having strong, independent Boards that protect shareholder interests. Sustainability is fully integrated into business models by design, whilst the Netherlands is home to many attractive transition technology companies such as Adyen (ADYEN), ASML Holdings (ASML) and BE Semiconductor Industries (BESI).

The Dutch economy is sophisticated, diverse, and innovation driven, and has been at the forefront in developing high-tech sectors, from life sciences and bio-tech to the digital economy and creative industries, whilst also encompassing precision engineering, manufacturing, petroleum, chemical and agro-industries. It is unsurprising therefore, given the synergies, that the Netherlands is the UK’s 4^th largest trading partner, and that Anglo-Dutch conglomerates have featured a shared industrial approach for over a century (think Royal Dutch Shell, Unilever and the continuing success of Anglo Dutch publisher, RELX).

Companies we admire and have often visited include Dutch insurer a.s.r Nederland (ASRNL), REIT Eurocommercial Properties (ECMPA), digital bank ING Groep (INGA) and academic publisher, Wolters Kluwer (WKL) – the latter two first movers in digital transition. Its incumbent telecommunications company KPN (KPN) has largely completed the transition to fibre (a transition BT in the UK is still only half way through), and is consequently reaping the cashflows and dividends of a fully modern, low capital, high return telco. Philips (PHIA) a globally significant company, has suffered a few slips and trips in recent years, but its transformation into a focused medical devices and instrumentation specialist, is one of just three global players in this high-tech market.

Elsewhere one can look to global beverages (Heineken), financial services (NN Group, AEGON, ABN Amro), and industrial chemicals (Akzo Nobel) for cutting edge technologies, manufacturing and distribution. We also admire Aalberts (AALB) a manufacturer of mission critical technologies with applications across many disciplines, and Arcadis (ARCAD), a specialist design and engineering consultancy in the infrastructure, environment, water and buildings arenas.

At a time when so much of the Eurozone has demonstrated sluggish, volatile returns, and is dogged by weak governance, the Netherlands Index, the AEX, has delivered 18.5% over on year (total return GBP to 31.10.25). The AEX has delivered annualised returns of 13.2% over 10 years outperforming both the French (CAC 40) and German (DAX) indices, which returned 10.7% and 10.5% respectively over the same period (TR GBP to 31.10.25). The Netherlands is ideal in our view for a deeper dive; perhaps it’s definitely time to ‘Ga Nederlands’ as the Dutch might say! 

*WHITEFRIARS is overweight to the Netherlands in both its global equity and high yield strategies.