The fighting agenda of Sweden’s Investment Fund Association

From Ucits IV to local tax law, the fund body’s Pia Nilsson talks about the many fights that will determine the collective investor landscape for years to come.

Pia Nilsson is an extremely busy managing director of the Swedish Investment Fund Association (Fondbolagens Förening). This is because there are big changes on the way in terms of pan-European regulation and local funds and fiscal law, partly as a response to the EU developments, but also because of domestic policy changes.

Sweden’s government has been in the fortunate position of overseeing the EU’s best economy ranked by GDP growth in the past couple of years.

There are no budget deficits restraining thoughts about tinkering with the way tax revenues are raised. Although any surpluses may be short-lived, there are options to consider in respect of taxing funds investors.

One key issue she is tackling is the creation of legislation to introduce a new type of investment savings account.

The aim of the Investeringssparkonto is to function as a sort of wrapper through which long-term savers could invest in funds. However, it has been rejected by the Association as too complex. As currently proposed by Sweden’s Ministry of Finance, it is threatening to impose too big a tax burden on certain types of fund investor.

While the department has calculated that the effective tax rate would be 22.2% on investments done within the account, the Association’s own back-testing results suggest that the tax rate could have hit up to 120% for long-term investors in mixed-asset funds using the account in the past ten years, according to the rules being proposed.

Another challenge around the new savings account involves fund supermarkets. There is an issue about direct sales between provider and investor, and whether this type of investor would be forced – under the account proposals and as they would apply to supermarkets – to go via an intermediary. This could lead to a distortion of competition in the funds market.

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