Sweden equity funds among best in past decade, says Fund Association
Return figures for Sweden equity funds show that investors would have made average annual returns of 12.5% over the past 10 years, according to figures published by the Swedish Investment Fund Association.
In nominal terms, SEK10,000 invested then would have become SEK32,500. And despite the declining values of equity funds in the past five years, those who have continued to invest monthly have seen the value of their fund shares increase over the full period.
The average return for any equity fund in the Swedish market over the past decade was 6.6%, Fondbolagens förening said.
Fredrik Pettersson, chief analyst and deputy managing director, said that looking at both five and 10 year periods illustrates extremes faced by investors. Over 10 years, 2002-2012, there has been high return because the period started following a steep decline in markets. But the 2007-2012 period has been one of poor returns, because of a long-lasting financial crisis.
“Common to both periods, however, is that Sweden funds, in which Swedish savers have a lot of money invested, have made good returns compared to funds with different geographical focus.”
Average annual return, equity funds, % to September 2012
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The Association said its figures also illustrate the benefit of regular monthly investments, particularly during the more recent five year period, when equity returns have generally been depressed. This is because of variations in the returns made during different points within this overall period.
One way to illustrate this is to compare the performance of equity funds against bond funds. On a five year basis (2007-2012), the Sweden equity fund sector made a return that equates to an annual average return of 0%. Bond funds made 30% over the full five year period, equal to an annual return of 3.8%.
However, when returns on regular monthly investments are compared, it is the Sweden equity funds that produced the best cumulative return on the same capital invested; SEK30,000 turned into SEK36,100 for equity investors, but a slightly lower SEK34,400 for bond investors.
Pettersson said that while surprising, the figures underlined that regular investments in equities through periods when markets are depressed could produce better outcomes for investors. The benefit comes from being able to spread risk over time, and means the investor does not have to try to time the market, he said.