Stockholm (NordSIP) – The Swedish Fund Selection Agency (Fondtorgsnämnden, in Swedish, or FTN) has awarded the procurement eight Nordic funds to five asset managers worth a total SEK17.8 billion. Of those eight procurement decisions, four mandates were awarded to actively managed Nordic equity funds with a focus on large and mid-cap companies, while another four were awarded for Nordic equity funds with a focus on small-cap businesses.
SEK8.8 billion of premium pension savers’ funds will be allocated to the large and mid-cap funds while another SEK9 billion will be allocated to the small-cap funds. Approximately 80,000 pension savers have holdings in funds affected by the procurement for the large and mid-cap funds while approximately 55,000 pension savers have holdings in the funds affected by the procurement for the small-cap funds.
The funds in these two categories that have not been allocated will, after a phase-out period, be deregistered from the fund platform. Savers with funds removed from the fund platform are given the opportunity to make a new choice. If the saver does not choose, the funds are automatically moved to an equivalent procured fund.
While none of the funds are dark green funds reporting under Article 9 of the EU’s Sustainable Finance Disclosures Regulation (SFDR), FTN argued the changes had improved the overall rating of available funds under these categories.
The Winners
Out of 17 tenders submitted, the winners of the large and mid-cap funds procurement process are “Handelsbanken Norden Selektiv” fund, the “Nordea Nordic” fund, the “SEB Nordenfond” fund and “Ålandsbanken Norden Aktie” fund.
The winners of the small-cap funds procurement process are the “Fondita Nordic Small Cap”, the “Handelsbanken Nordiska Småbolag”, Nordea’s “Småbolagsfond Norden”, and the “SEB Nordic Small Cap” fund. These four funds were selected from a pool of ten submitted tenders
“The work to quality assure the funds in the premium pension system is proceeding according to plan and we are pleased to finalise two more procurements now,” says Mats Dillén, Chairman of The Swedish Fund Selection Agency.
For pension savers, the procurement means that all the funds in the category have undergone an extensive evaluation and are of high quality, according to FTN. By law, the funds procured must be suitable, controllable, sustainable, cost-efficient, and high quality. In addition, the range on the fund platform must provide pension savers with freedom of choice.
“The fact that all funds in the category are now quality-assured means a safer choice environment for savers. Regardless of which fund you choose, you can rest assured that it is a fund with high quality management,” says Erik Fransson, executive director of The Swedish Fund Selection Agency.
All Article 8s
According to FTN, sustainability is a requirement of the procurement process. “By law, the funds procured must be suitable, controllable, sustainable, cost-efficient and of high quality,” the platform notes. Reviewing the disclosures features of the winning funds, none of them “have sustainable investment as their objective”, as per Article 9 SFDR. Instead, all eight funds were Article 8 SFDR funds that “promote environmental or social characteristics”. Nevertheless, according to FTN, “the minimum level of sustainability in the funds has been raised.
It should, however, be noted that one of the tenders submitted and rejected for the procurement of large- and mid-cap funds, was an Article 9 SFDR fund: the Norron SICAV – Sustainable Equity.
Moreover, on the current affiliated fund platform, there is one requirement regarding sustainability. Fund managers should be signatories of, or covered by the UN Principles for Responsible Investment (PRI). This is still a requirement for fund managers on the procured fund platform.
FTN also notes that the requirements for the funds have been raised in terms of sustainability, compared to the requirements on the existing affiliated fund platform. An example of this is the requirement that the fund manager must utilise a norm-based screening process in its management to detect potential violations of international standards, such as the Global Compact’s Principles of Corporate Social Responsibility, and that the fund manager identifies how well the operations in which the fund invests consider environmental, social and governance aspects.
No specific reference is made to sustainable concerns in the in-depth qualitative and quantitative analysis conducted by FTN to evaluate the information provided in the tenders. The reports only mentioned five factors FTN will assess in evaluating the award criteria: Investment philosophy, investment process, manager resources, investment performance and Administration and risk control. No specific reference to sustainability is made in the discussion of these factors.
