Costs fall, but so do household investments in funds – Swedish data
Morningstar data suggesting the costs of investing in funds have continued to fall in Sweden have clashed with other data from the Statistics Sweden suggesting that households have cut their exposure to funds through the second quarter this year.
The Morningstar data covers a number of European markets, and has been cited by the Swedish Investment Fund Association. This shows that, for example, the average annual management charge of a Europe equity fund fell from 1.09% in 2013, to 0.95% in 2016. Across Europe, the average fell from 1.43% to 1.27%. The data suggests Sweden has the third cheapest investor costs on this basis, just behind Switzerland (2016 average 0.61%, and the Netherlands 0.71%).
Sweden also fares well in other fund categories. It is the cheapest among all the measured European markets for balanced funds (0.98%), third cheapest for bond funds (0.41%), and fourth cheapest for money market funds (0.14%).
The Association noted that a seperate survey it commissioned from TNS Sifo Prospera earlier in 2016 identified the annual cost along with risk levels were the two most important factors that retail fund investors looked to when selecting funds. The cost was seen as “very important” to a greater degree among the older age groups surveyed: 59% of the 51-64 age group agreed with this, while 49% did so in the 18-33 age group.
The shorter term importance of lower costs has not, however, stymied a move away from funds for households alloating net new savings, data from Statistics Sweden (SCB) suggest.
Its figures suggest that households withdrew SEK2bn on a net basis in the second quarter of 2016, against net sales recorded at the same time a year ago. Equity funds were most sold during the period, SCB said.
However, because of market movements, the total value of funds held increased through the period by some SEK7bn to SEK588bn, compared to SEK620bn for the same period last year.
SCB added that despite the decrease in household investments in funds, total fund investmetns were postive, and were up by some SEK5bn over the period. Swedish and non-Swedish financial institutions invested SEK6bn and SEK4bn respectively over the period – including fund based and premium pension based investments.