The Swedish Investment Fund Association has outlined its key priorities this year, following record year that saw SEK153bn (€16.1bn) in net new savings put into funds.
The total value of assets in funds represented by the Association rose above SEK3trn (€316.5bn) for the first time, as the value of assets under management gained some SEK520bn (€55bn), of which a third was due to net new savings.
Swedish investors benefitted from the roughly 20% fall in the value of SEK against the dollar, which helps explain the positive returns experienced from most foreign markets from the perspective of Swedes, the Association added.
Short term money market funds were the only segment that saw net redemptions over the full year, 2014, of some SEK1.9bn.
Looking to its objectives as a member driven organisation, the Association said that its first priority is to deal with possibly proposals to ban commission. A consultation is currently ongoing in the country involving regulators on this issue. The Association said that it hopes “that there will not be a proposal for an outright ban on commission”, as “this could worsen access to independent fund provider’s funds, which is not a desired outcome from the perspective of fund investors.”
The second key priority is dealing with a separate consultation into the implementation of Ucits IV in Swedish law. The first stage of the consultation is expected to be completed by 30 April, however, the Association notes that it is the second phase that may be more interesting as it deals with the question of how to improve competitiveness of Swedish fund management, and whether fund providers themselves should be able to also offer the investment savings account (Investeringssparkonto, ISK), which is a policy the Association has fought for since the ISK regime was introduced.
This consultation will also deal with the question of proposals to improve publication of information and comparisons between fund providers in terms of how they integrate sustainability into their management. The second phase is expected to be dealt with in the run-up to 31 December 2015.
The third priority is Priips, the EU regulations concerning packaged retail investment and insurance based products. The Association notes that currently there are still discussions at the EU level as to how factsheets should present data and information to retail investors, for example, as they pertain to unit linked solutions, where fees need to be illustrated not just in terms of the manager but also the insurer.
The fourth priority concerns Sweden’s Premium Pension system, and an inquiry is ongoing, but the Association said that it would prefer an additional one regarding how individual long term savings for pensions can be further stimulated. There is concern that certain fiscal changes could leave long term savers exposed if there is no further discussion around how to complement core pension savings. The Association is proposing an “ISK-Pension”, which would implement a flat tax model on returns that would balance the fact savers need to lock in their assets until retirement age, when returns are paid out in the form of a pension.
Further to the four key priorities, the Association has also identified the ongoing debate in Sweden around amortisation and interest rates as ripe for discussion. The Swedish central bank has pushed mortgage lenders to implement amortisation costs as a way to better manage peaks and troughs in the local residential housing market, but the Association argues that the best outcome for individuals may be to divide money between amortisation and investing in funds, in addition to using the ISK.
And the Association remains agnostic on the matter of passive versus active funds, noting simply that competition in the market for funds is good, but that investors need to remember to compare returns after fees.