Mutual Funds in the Netherlands

A mutual fund in the Netherlands represents a type of vehicle with a long tradition on the local market.

Quick Facts
Definition	Mutual funds are investment funds that pool money from more investors and are managed by professionals.
Applicable legislation	– the Alternative Investment Funds (AIFs) and the Alternative Investment Fund Managers Directive (AIFMD), – the Markets in Financial Instruments Directive (MiFID II), – the Dutch Financial Supervision Law.
Types of mutual funds in the Netherlands	– equity funds, – bond funds, – money market funds, – specialty funds, – retail mutual funds.
Legal entities used to create a Dutch mutual fund	– private and public companies, – limited partnerships, – funds for joint account.
Types of investors addressed	Qualified and professional investors.
Special management requirements (YES/NO)	Yes, mutual funds managers must be licensed under the Alternative Investment Fund Managers Directive.
Authorization requirements	Authorization must be obtained with the Dutch Authority for Financial Markets (AFM).
AFM licensing exemption (if available)	Yes, through the Small Managers Regime.
Assets to invest in	– stock, – bonds, – securities, – shares.
Possibility to operate a foreign mutual fund in the Netherlands (YES/NO)	Yes, through passporting rights or authorization with the AFM.
How do investors earn money from mutual funds?	– capital gains, – dividend distributuions, – interests, – share sales.
Taxation of mutual funds in the Netherlands	Taxation depends on the type of structure used for the creation of the fund.
Possibility to operate a mutual fund abroad (YES/NO)	Yes, in accordance with the AIFM regulations.
Setup time frame (approx).	Approx one year.
Advantages of Dutch mutual funds	– professional management, – access to multiple investment options, – access to large stock exchanges around the world.

What are the main features of a Dutch mutual fund?

A mutual fund is an investment vehicle that pools money from multiple shareholders and invests in securities. This type of fund is administered by a manager that chooses the best assets. Another important feature of a Dutch mutual fund is that every investor shares in the profits.

What should I consider when opening a mutual fund in the Netherlands?

Those interested in such a venture will usually consult with financial advisors with respect to:

• the best legal form to adopt;
• the appointment of the fund managers;
• the necessary licenses;
• the types of assets to invest in;
• the best investment strategy;
• taxation of the fund.

What types of assets can a Dutch mutual fund invest in?

Mutual funds invest in stocks, bonds, and other similar financial instruments.

What are the steps to create a mutual fund in the Netherlands?

As an investor:

1. you must meet with a fund manager to decide on the structure of the fund;
2. the fund manager is also the one to draft and register the investment vehicle of the fund;
3. the fund must also obtain a license from the Dutch Authority for the Financial Markets (AFM).

What are the legal forms a Dutch mutual fund can take?

A businessperson looking to establish a mutual fund in the Netherlands has a few legal forms to select from, among which:

• Public limited companies ( NV) and private limited liability companies (BV) are both corporate entities. The NV is eligible for local stock exchange listing.
• Limited partnerships (CV), as well as funds for joint accounts (fonds voor gemene rekening, or FGR), both of which are not entities with legal personality.

What types of mutual funds can I create in the Netherlands?

These are:

• money market funds that allow investments in high-quality, short-term securities issued by national companies and the government (they allow for low-risk investments);
• bond funds that have higher risks than money market funds; however, they can invest in a wide range of instruments with a possibility of generating high returns;
• stock funds that usually invest in stock issued by corporations.

How does a Dutch mutual fund work?

As an investor, you can buy shares in the fund. This way, you become an owner of the fund’s assets. The fund manager is in charge of creating the investment strategy, choosing the assets to invest in, and gathering the money from the investors.

The value of the mutual fund is tied to the performance of the fund.

Is it necessary to appoint an authorized fund manager when creating a mutual fund in the Netherlands?

Yes, it is mandatory.

What types of investors does a mutual fund address?

Dutch mutual funds are created to cater to the needs of professional investors. However, the Netherlands also enables foreign funds to operate on its market, in cases in which non-EU/EEA funds can address qualified investors. Either way, such investment funds cannot be marketed to persons or companies that do not know how financial markets operate.

What are the investment strategies a mutual fund can use to generate money?

Some of the strategies the investment manager can use are:

• buying stocks in companies;
• buying bonds, dividends, and real estate investment trusts;
• acquiring a mix of assets to generate money for investors.

What are the benefits of investing in Dutch mutual funds?

Diversification is one of the main advantages offered by mutual funds in the Netherlands. They also provide other opportunities for making money:

• through dividends;
• through the distribution of capital gains.

Also, mutual funds address a wide range of investors, from small or individual ones to diversified, professionally managed portfolios for professional ones.

Investors interested in opening a fund in this jurisdiction should know that the Netherlands represents a top destination for the domiciliation of mutual funds, for matters concerning the taxation of the vehicles or the regulatory framework. Please contact our team of affiliates in the Netherlands for more details on the registration of a mutual fund.