Swedish industry association comments on active versus passive debate

The Swedish Investment Fund Association has published a report into the country’s fund market, with particular focus on the role played by actively and passively managed fund respectively.

The report – Fondspecial: Aktiv och passiv fondförvaltning – does not set out to advise investors to consider either type of management as better, but does define what it believes are key characteristics of each approach, and how these may be best used by investors.

“The choice between active and passive management should not be seen as the first choice one makes as an investor considering funds,” said Fredrik Pettersson, chief analyst and deputy managing director of the Association.

“First and foremost one should consider what investment horizon and attitude to risk one has. Only when a type of fund has been chosen is it time to start comparing individual funds that have the same investment approach. Then it can be interesting to consider what type of management the fund should have, such as active or passive, for example.”

What the report does show, however, is the continued market share gains made by passively managed funds in the Swedish market over the past decade.

Equity focused index funds in the local market have seen their combined AUM rise from some SEK15bn ten years ago to some SEK147bn (€16.3bn) today.

From some 3% share of the market in equity funds, passive vehicles now account for 11% of the market, the Association’s data also shows.

And looking at net investments to equity funds in 2013 year to date shows that a similar amount, SEK10bn, has been invested in passive and active equity funds.

To download the full report click here (in Swedish): http://www.fondbolagen.se/Documents/Fondbolagen/Studier%20-%20dokument/Fondspecial/FONDSPECIAL_Aktiv_och_passiv_forvaltning.pdf

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