He said because of the large pool of pension assets — $624.6 billion — in the Netherlands (it's the second-biggest pension fund market in Europe, behind the $1.66 trillion U.K. market), but the relatively small size of its domestic securities market, the outward flows weren't matched by flows into the Dutch market from foreign investors.
According to research from Morgan Stanley & Co., London, the Netherlands' stock market lost out to the tune of $47 billion in 1999 as a result of outflows not being matched by inflows.
Hubert Schicketanz, a partner with Heubeck GmbH, Vienna, agreed there was a noticeable shift in asset allocation among European pension plans that coincided with the euro's introduction. Whether this shift was a direct result of the new currency is hard to measure, he said.
"There was movement, especially in smaller countries where they had big allocations to their domestic markets. This began to change quickly in 1999-2000. But it might have been for a variety of reasons, one of which was the currency factor," he said.
Other reasons included a general acceptance by pension executives that greater equity allocations were beneficial in obtaining superior longer-term investment returns.
"There was already a move among pension schemes in Europe in the late '90s, to what we would call a more Anglo-Saxon model in pension investing — that could also explain asset allocation changes," Mr. Schicketanz added.
Peter Dencik, director of business development at Singer & Friedlander Investment Management Ltd., London, said this outflow was especially noticeable among small-cap and midcap stocks in most markets in Europe.
"Small caps underperformed substantially in 1999-2000, and the thought is this was caused by pension schemes dumping their domestic exposure and adopting Europewide benchmarks that are, predominantly, large-cap heavy," he said.
So the result? European pension schemes might now be underexposed to midcap and small-cap equities.
"It begs the question of whether there is now an opportunity for small-cap specialists in Europe," said one investment consultant in London, who declined to be named.
In the past year, there's certainly been an increased demand for European small-cap specialists.
Pensions & Investments has reported that a number of money managers were noting increased demand for small companies mandates from European pension schemes this year, but none of the schemes interviewed for this article would comment on that.
Some industry experts believe the euro's introduction has been a catalyst for schemes to be more adventurous in their investments.
"I'm not sure if it was a coincidence that the introduction of the euro coincided with a big lift in European pension funds' allocation to equities," Mr. Derbyshire said.
Andreas Helka, managing director of Hoechst Pensionskasse, Frankfurt, Germany, which has €5 billion in assets, said his scheme's bond portfolio ventured down the credit spectrum in the years after the euro's birth.
Mr. Helka declined to give precise details of the changes at his scheme, but he admitted the scheme had removed managers running specialist German equities mandates. They were replaced with managers running European mandates.
"The last chapters in this is how people deal with Britain," said Morgan Stanley's Mr. Derbyshire.
Britain, as well as Sweden and Denmark, have not joined Europe's common currency.