Sweden's Financial Supervisory Authority has published new comparisons showing how much actively managed funds diverge from their benchmarks, alongside third quarter data confirming substantially higher fees than for index funds. The activity measure, active risk, captures how much a fund's returns have varied relative to its benchmark over the past two years, helping investors assess what they receive for higher management fees.
Median active risk was 3.8% for actively managed funds investing in Sweden and 5.3% for active global funds, compared with 0.1% for index funds in both categories. Readings ranged from 2.8% to 6.8% for active funds investing in Sweden and from 2.8% to 11.6% for active global funds. In the release, Moa Langemark, the authority's consumer protection economist, suggested active risk above 3% as a reference point for an actively managed fund. A higher reading indicates greater divergence from the benchmark, not necessarily better returns.
Median fees for actively managed funds investing in Sweden were 1.30%, compared with 0.20% for corresponding index funds. For global funds, the respective fees were 1.25% and 0.25%. Langemark encouraged investors paying for active management to consider whether a cheaper fund could meet their needs when active risk is low.