SFSA Offers Guidance to Fund Managers

    Stockholm (NordSIP) – On 18 November, Sweden’s recently established Fund Selection Agency, Fondtorgsnämnden (SFSA), hosted its first status update for fund managers. The widely anticipated event gathered more than a hundred representatives from the asset management industry in Sweden and abroad, eager to learn about the agency’s ambitious plans for the coming years. In the spirit of equal treatment, SFSA also provided a link to a pre-recorded version of the presentation for those unable to attend the event in Stockholm in person.

    SFSA has been tasked by the Swedish parliament with procuring, monitoring, and quality-ensuring the funds in the Swedish premium pension system. The team of experts entrusted with this responsibility started to take shape earlier this year when Executive Director Erik Fransson announced several key hires. The agency is now organised into three units: Procurement and product strategy, led by Majdi Chammas; Investment due diligence, headed by Tina Rönnholm; and Operational due diligence and monitoring, under Magnus Strömer.

    At the meeting, Fransson, Chammas and Strömer provided a comprehensive overview of the agency’s progress so far, updating the industry representatives on the organisation’s current status, the evolving procurement process, the proposed fee model, and the first categories up for evaluation.

    Transparency and availability of data and information seem to be of utmost importance to SFSA during the initial qualification phase of the procurement process. The agency forewarns potential participants that they can expect extensive and detailed RFPs, to be published on e-Avrop in a timely manner. “Even if you as a fund manager do not intend to participate in the first procurement, download and look through the material to gain an understanding of the procurement process,” recommends Strömer.

    As to the next phase in the process, the proposed fund evaluation model offers few surprises for any fund manager used to responding to RFPs and going through standard due diligence processes. According to Chammas, SFSA’s fund assessment will focus on the traditional four areas, aka the four Ps of manager selection: philosophy, process, people, and performance. The model seems to have a certain predilection for qualitative analysis. However, the agency also states the importance of quantitative analysis as a means of verifying fund managers’ statements and results.

    It is worth noting that sustainability garners extra attention in the evaluation process. “The new law and the new fund agreements put emphasis on sustainability and on investment processes with an integrated sustainability perspective, where active ownership is practised,” states SFSA. The details of the agency’s sustainability strategy are yet to be decided upon; watch out for this space.

    As SFSA’s organisation is to be financed outside the state budget, the agency has also proposed a fee model, still subject to referral. According to the proposal, all fund companies taking part in a procurement process will pay a participation fee estimated at SEK 18 000. For funds on the platform, there will be an annual fee of 0.5 basis points for passive funds or 1.5 basis points for actively managed funds.

    At the end of the presentation, SFSA announces the news that fund managers are probably most eager to hear, namely the categories that the agency intends to tackle first: active and passive European equity; passive global equities; active Nordic equities; and global fixed income. One of these categories will be up for grabs already in the first quarter of 2023, according to Fransson.

    Let the revamp of Sweden’s premium pension platform begin!

    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

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