More difficult to charge excessive fund fees
As of 1 January 2020, new requirements will be introduced for fund managers to more clearly report how actively a fund’s assets are managed. The aim is to reduce the incidence of funds marketed as actively managed but which in fact follow a benchmark. This is the Government’s proposal in a bill presented to the Riksdag.
“People should not be duped into paying for something they aren’t getting. We’re now making it more difficult for rogue actors to charge excessive fees. This change will benefit many small savers,” says Minister for Financial Markets Per Bolund.
The proposal means that fund managers will be required to submit information about the level of activity of their fund management in relation to a ‘relevant benchmark’. This information must describe how the fund is managed and why the index used is relevant. If the fund has existed for two or more years, the fund manager must also show the level of activity as a measure of activity for each of the previous ten years (or the number of years that the fund has existed). The fund manager must also explain the level of activity achieved. For funds with holdings that are so concentrated and specific that there is no relevant index for comparison, the fund manager must provide information about this instead. The information must be available on the fund manager’s website, in its prospectus, and in the fund’s annual report.
This information requirement will apply to the management of mutual funds and special funds by managers that are fund companies, alternative investment fund managers, foreign management companies holding a licence to manage mutual funds from Finansinspektionen (Sweden’s financial supervisory authority), and AP7’s management of funds in the premium pension system.
It is proposed that the rules enter into force on 1 January 2020.