Shedding further insight into investment and savings trends since 1979, the Swedish Investment Fund Association (Fondbolagens förening) has identified the period 2010-2019 as one in which locals have increasingly turned towars funds offering exposure to sustainability.
This shift has occurred at the same time as a change in distribution. in 2000, some two-thirds of Swedish money in funds was in the hands of direct savings with fund providers, with the other major share invested via insurance based products - where a quarter, 24%, of household fund wealth was located. In 2019, the share of direct savings is 13%, with 33% in the premium pension system, and 10% in investment savings accounts (ISK). The high levels and relatively constant new savings being directed towards the premium pension and insurance based products is explained by automated sales, eg, a proportion of wages earned is automatically diverted towards the premium pension.
The ISK regime, which came in 2012, has taken a large share of net investments at the retail level in recent years. The low interest rate environment has made it more attractive, Sifa adds. From 2018, fund providers have also been able to offer savings in their own funds via ISK accounts.
Meanwhile, sutsainability has become increasingly important, with a third of all Swedes surveyed in 2019 saying that they invest in funds with sustainability objectives, against 24% in 2018.
There have long been funds excluding companies with links to weapons, alcohol and tobacco, as well as funds that have worked together with non profit organisatoins. The trend has been towards funds that take account of positive screening during investment decisions, and which work to influence the companies in which they invest to become more sustainable.
Sifa notes that the 2010s saw the development of a sustainability profile by Swesif, firstly for the premium pension and then for the private market in funds. Also launched into the market have been different environmental and sustainability labels. Then, by 2018, new law in Sweden demanded that funds report on their sustainability work. This made sustainability a regulatory matter, and the local fund industry through its Association developed an obligatory standard based on the Swesif sustainbility profile. The Association has also adopted a new pathway for reporting carbon emissions.
Together with pending EU level objectives concerning sustainble finance, Sifa expects further developments in the area of sustainability and use of funds.
To read the full report on the past 40 years of fund market developments in Sweden, click the pdf link in the image below: