Regulation, equities and Africa in Swedish investor dialogue

Sweden’s key trade association and its members see 2012 as another year of regulatory and market challenges, as well as opportunity through new savings structures and in certain sectors.

Fondbolagens förening, the Swedish Investment Fund Association, recently issued a list of key challenges for the funds industry in its domestic market next year; these included responses to MiFID II proposals, the introduction of a new type of investment savings account, and the expectation that funds will merge.

Overall, Sweden continues to shine as a funds market. Association data suggests that in the past year the ratio of companies and institutions investing in funds hit 91%.

Other data suggests that when the so-called Premium Pension system is included, then fund participation hits “99%”.

The historical interest in collective investments shows no signs of dimishing. If anything it is set to grow through the adoption of the new investment savings account framework, which some say could boost participation among children and grandchildren – including those who already have funds investments made in their names.

As always, however, government policy seems to be giving with one hand and taking away with the other. Swedish fund investors are anxiously awaiting the practical implications of new tax law that puts the onus on the investor to pay tax rather than the fund.

“We removed wealth tax in our country, so why re-introduce it again on fund investments? We think that is unnecessary. Either we should have an annual flat tax, or tax on actual gains when redemptions are made,” Pia Nilsson, chief executive of the Association said according to local media reports.

Another spat has developed over management fees. Minister for Financial Markets Peter Norman has been chasing this issue. The Association takes umbrage with the suggestion that its members should try to calculate the future impact of fees on returns. Such administration is seen as a cost that will unnecessarily hit investors.

There is no doubt, however, that Norman may be tapping into a trend that professional selectors already are starting to apply with increased vigour. Catella Förmögenhetsförvaltning is one local wealth manager that has decided to construct portfolios of ETFs on behalf of clients because of the issue of fees vs. Returns. (Finland’s Taaleritehdas is another in the region adopting a similar approach).

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