Home bias no problem for Swedish investors, research finds

Figures published by the Swedish Investment Fund Association suggest that Sweden equity funds have provided about 50% more annual return over the past 15 years than the average for all equity and bond funds in the local market.

Over the period 1998-2012, the average bond fund returned 4.8% annually, and the average equity fund a similar amount. This is due to the fact that the the markets have been through three key phases over the period: pre-dot com, recovery and then financial crisis.

However, Sweden equity funds have averaged annual returns of 7.3% over the period. The Swedish stock market has performed well even against emerging markets – something that the Association said should be highlighted given the fact a significant proportion of fund investments in Sweden are made into the asset class.

Fredrik Pettersson, chief analyst and deputy managing director, said: “The explanation is that the Swedish economy has been relatively strong, exports are significant and many Swedish listed companies are operating globally. That way, investors with Sweden funds increase their diversification of risk and take part in the value increase occurring in emerging markets.”

The performance of the Swedish market means that the issue of home bias has been an advantage to Swedish investors over the period.

Other key figures published in a report published by the Association – Sparande i turbulenta tider (Investing in turbulent times) – co-authored by Pettersson and colleague Fredrik Hård af Segerstad, economist, include:

   – The value of assets in funds has risen from about SEK500bn to just over SEK2trn (€232bn)

   – The value of household savings in funds has increased by some SEK1.25trn, of which a third, SEK417bn, has come from capital appreciation

   – Excluding long term savings – into occupational pensions and the compulsory Premium Pension – then household savings have been negative, meaning they have consumed more than their disposable income.

To read the full research report (in Swedish) click here:[asset_library_tag 6587,Sparande i turbulenta tider]


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