New world record
in fund-based saving
This study from May 2010 shows that the percentage of Sweden’s population that saves in investment funds is higher than in any other country worldwide. Everyone is now a fund saver, thanks to the premium pension system and 82% of Swedes save through funds in some other way for their occupational pension or privately. This marks a significant increase since 2008, when 74% had non-premium pension-related fund savings. Emerging market funds are the most popular type of fund.
Read the study in pdf here.
- Few savers make comparisons with any index except the Stockholm Stock Exchange trend.
- Risk and fees are the most important factors in choosing funds, but only three in ten savers know that fees are deducted before the fund value trend is reported.
- 74 per cent of people have automatic transfers made to their fund savings account every month.
- 66 per cent of all children in Sweden have fund-based savings.
Percentage of population, aged 18-74, who save in funds (%)
“This massive interest in funds is very pleasing indeed,” says Pia Nilsson, Managing Director of the Swedish Investment Fund Association.
TNS Sifo Prospera is commissioned by the Swedish Investment Fund Association on a biennial basis to conduct an extensive interview-based survey of fund-based saving. The 2010 survey was conducted between February and March this year and comprised 1,501 respondents aged between 18 and 74.
In the spring of 2008, 74 per cent of all adults had fund-based savings in addition to those made within the context of their premium pension savings. That figure has now risen to an impressive 82 per cent. Men account for the biggest increase, rising from 71 per cent in 2008 to 83 per cent in 2010, but the percentage of women with savings in funds in addition to their premium pension savings has also risen during the period from 76 per cent to 80 per cent.
88 per cent of the 43-62 age group have fund-based savings in addition to their premium pension savings.
“Previous net fund asset statistics have shown record levels of new saving in funds over the past year. This new survey shows that many people are also saving in funds for the first time. Equity funds are attracting the greatest interest, suggesting that an increased percentage of Swedes have chosen to be part of the stock market upturn that followed the deep downturn in 2008 caused by the financial crisis,” says Pia Nilsson.
Pensions the most common motive for fund-based saving
The percentage of all adults who save directly in funds (with no links to pensions or endowment insurance) has increased over the last two years from 45 per cent to 54 per cent. Saving in funds for occupational pensions has also become more common, with the percentage of all adults aged between 18 and 74 saving in this way rising from 45 per cent to 52 per cent. Interest in endowment insurance has also increased, rising to its current level of 17 per cent in comparison with 12 per cent in 2008.
The two most common reasons for saving in funds are to boost the saver’s pension (46%) and to build up a financial buffer (43%). Only 11 per cent say that they are saving for a specific purpose, such as travel or housing. 39 per cent of those who say that they are saving for their pension save in deductible pension savings funds, while 37 per cent have “ordinary fund saving”, i.e. save directly in funds. 20 per cent have endowment insurance.
The results of the survey with regard to premium pension saving have already been presented in a press release dated 16th April 2010.
Interest in other savings formats
The survey also shows how interest in non-fund-based saving formats has developed.
Funds are the most popular savings format, but traditional pension insurance and savings accounts are almost as common. Interest in both fund-based saving and direct investment in shares has increased, but there is a substantial difference between men’s and women’s savings preferences: only 25 per cent of women hold individual equities, as opposed to 42 per cent of men. 62 per cent of those with an annual income of less than SEK 200,000 invest in funds, with 21 per cent investing in individual equities.
15 per cent of every survey respondent has savings in bonds. Bonds are most popular in the older age groups, with 24 per cent of those over the age of 63 holding bonds, 15 per cent of whom hold premium bonds. Loan amortisation has declined, probably due to the fact that interest rates are currently very low.
Different fund types
Equity funds are the most popular fund type and are held by 58 per cent of respondents. 66 per cent of men and 50 per cent of women have holdings in this type of fund. Emerging market funds are the most popular type of equity fund, with 30 per cent of fund savers saving in this type of fund (37 per cent of men and 23 per cent of women).
Only 5 per cent state that they save in index funds.
The percentage of savers with holdings in balanced funds and fixed income funds has fallen from 23 per cent to 18 per cent, and from 15 per cent to 12 per cent, respectively, and there is no significant difference between men and women with regard to these types of funds.
Most important factors when choosing funds
and fund management companies
Risk levels and fees are, according to savers, the most important factors to take into consideration when choosing funds. Only three out of every ten are aware, however, that fees are deducted before returns are shown.
“It’s unfortunate, given how widely fund fees have been discussed, that only three out of every ten fund savers know that all fees and costs are deducted before a fund’s value performance is reported. Comparisons are, furthermore, directly misleading if ignorance results in the fee being deducted twice,” says Pia Nilsson.
4 per cent of fund savers say that they have holdings in funds with a specific ethical/environmental focus. When asked whether it is important to take ethical and environmental issues into account when choosing funds, however, 31 per cent say that this is the case, which could be interpreted as applying to all funds and not solely to those with specific investment criteria of this kind.
The most important factors when choosing fund management companies are that they have skilled investors who produce good analyses, that, as a customer, one is treated well, and that the company inspires confidence.
The most common means of evaluating a fund already owned is to compare it with the fund’s previous performance and the increase in value in relation to the acquisition value. 30 per cent of men also compare against the performance by the Stockholm Stock Exchange, which only 14 per cent of women do. 6 per cent compare with another index (9 per cent of men and 4 per cent of women). The percentage comparing the funds’ ratings is equally low.
Advice and knowledge
65 per cent think saving in funds is easy (72 per cent of men and 58 per cent of women). 57 per cent think that they have sufficient knowledge of personal finances (50 per cent of women and 62 per cent of men).
Fund savers can increase their knowledge of funds, saving and personal finances through the information provided at customer meetings and via the provision of individual advice. Almost half of all fund savers (47%) have received targeted advice over the last two years. The average grade they award this advice, on a scale from 1 to 5, is 3.9. Women award an average grade of 4.0, while men’s average grade is 3.7. Those with the lowest income (annual incomes of less than SEK 200,000), award an average grade of 4.0.
34 per cent would conceivably pay for independent advice. This figure rises to 40 per cent in the youngest target group – those aged from 18-42.
17 per cent have attended customer meetings in the last two years.
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