Sustainable pension funds on offer within Sweden’s Premium Pension System (PPM) have had both higher returns and lower fees on average in the last five years than other funds, according to new data from the Swedish Pensions Agency.
In its report ’Statistics on sustainable funds within the Premium Pension System’, the Swedish Pensions Agency (Pensionsmyndigheten), the government body which administers and pays national pensions and provides information about pensions, says funds included in the PPM fund marketplace bearing the “M/E” environmental/ethical label had lower fees and higher returns over the five years to the end of December 2015 than other funds.
The M/E label is given to funds that take environmental and/or ethical considerations into account in their investment approach.
Niklas Näsström, financial analyst at the Swedish Pensions Agency, said: “It is clear that sustainable funds have lower fees than other funds.”
This was true regardless of whether the analysis was based on capital-weighted or unweighted average fees, he said.
The average return for M/E-labelled funds in the last five years is 5.5% compared with 4.1% for other funds.
The outperformance observed applied to all types of fund except bond funds, the agency said, with the same comparative result apparent for equity funds, mixed funds and generation funds, where risk is reduced as the saver gets older.
In the case of bond funds, however, which are a small proportion of the overall funds on offer, other funds had performed better over the period than those with the environmental/ethical label.
The proportion of sustainable funds among all PPM funds has been increasing gradually since 2009 and reached 23% in 2015, according to the data.