A huge increase in the number of funds available, increasing awareness of costs and increasing competition are among the key trends that hae threaded their way through the local fund industry in Sweden over the past 40 years, and which are addressed in new research published by the Swedish Investment Fund Association.
Subtitled How Sweden became world champion in fund savings, the report's authors Fredrik Pettersson, chief analyst, deputy managing director, Gustav Sjöholm, savings economist, and Fredrik Hård, economist, NAVs, have laid out developments over the period.
Sweden got if first equity fund law in 1974. The introduction in 1978 of a new savings regime brought tax efficiency to equity fund investments. By 1979 there were 24 relevant funds in the Swedish market, according to data from Statistics Sweden, while total industry assets were some SEK1bn (€929m).
Since then, the Stockholm Stock Exchange has gained 29,700% in SEK terms, equivalent to an annual return of 15.8%. An investment of SEK1,000 (€93) at the start of 1980 would by the furst quarter of 2019 have become about SEK300,000 (€27,890). This has taken place across a backdrop of a number of corrections, including two since the millennium in the form of the dot.com bubble bursting and the global financial crisis. Gains in Swedish equity asset values have helped encourage investments in funds, as the below table suggests.
|Total return||Annual average|
Source: Swedish Investment Fund Association; returns in SEK
The authors have picked out key long term trends. These include growing awareness of costs; increasing diversification in the equity funds space; the shift from direct investments into funds towards pensions and insurance based savings; and the evolution of sustainable investing from a niche to become the foundation for asset management.
They also provide insight into macroeconomic trends and how these have shaped the propensity for Swedish households to acquire exposure to risk. The data clearly point to a risk off attitude coming to the fore in the wake of the global financial crisis, which made households biased towards less risk assets than equity, the report suggests.
To read the full report click here: