Legal changes set to open up Sweden's mutual funds
SWEDEN- Reform to Sweden’s mutual funds legislation may result in the abolition of capital gains tax for members switching between fund providers. If the move is introduced, it will open the e95bn mutual fund market to foreign investment managers- at present, local banks account for 80% of the business.
Ulf Kallum, co-founder of the Stockholm-based consultants Wassum, says: “there is little movement between the banks and fund managers and the authorities want to build up slightly better competition.”
A committee chaired by judge Anders Nordström is working on a finance ministry directive covering securities legislation and mutual funds.
The committee is due to report back to the ministry next month but Swedish television yesterday quoted Nordström as saying they will recommend that unit holders be tax exempt when changing between providers.
Fund holders are taxed 30% on any capital gains when they switch and Kallum says this has made it more difficult to change and has consequently stifled movement.
Swedish TV claimed the moves were aimed to inject a little competition into the market and to force fund managers to focus more on better service provision.
Nordström was unavailable for comment but fellow committee member Joakim Scaff said he must have been misquoted since they never disclose recommendations before reporting back.