SWEDEN - Initial enthusiasm for fund selection under Sweden’s new PPM pensions system appears to be waning with fewer individuals making their own investment choices and more money flowing towards the default seventh AP fund.

Seventy seven per cent of the working population in the two northern regions of Sweden – the first to make their selections – decided to make an individual choice, while only 62% of those living in the district of Stockholm and the island of Gotland have made a choice so far. A total of SEK49.3bn (e5.7bn) has been invested through the system in the whole of Sweden.

Robur’s Contura (SEK2.25bn, e260m) and Pension (SEK1.57bn, 182m) equity funds, along with AMF’s World (SEK1.81bn, e210m) and Sweden (SEK2.25bn, e260m) equity funds have been the most popular investment choices throughout the country. Didner & Gerge’s equity fund (SEK1.14bn, e132m) follows as the fifth most popular choice with SPP’s and others’ lifestyle funds evenly distributed between the generations.

The default seventh AP fund has attracted some SEK10.68bn (e1.24bn) from people not wishing to actively allocate their pension assets and an extra SEK576m (e67m) from those choosing to invest only some of their assets in it. On average pension savers have allocated their assets in 3.4 funds, with 67.3% of women and 64.4% of men opting for an active choice.

Ulf Hanson, the director of asset management and fund administration at PPM, can only speculate why there has been a decline in asset allocation. The current volatility of the stock market might be one of the reasons, while the busy Christmas season might have been another, he says.

PPM is currently looking into the reasons behind the sudden drop of interest in fund allocation by the general public.

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