Finanstilsynet go hard out against the overpriced fund – Aftenposten

financial supervisory authority of norway dishes sharp criticism against the storbankene and others who provide so-called kombinasjonsfond.

This is the fund where people fondssparing is split in two underlying funds: some are placed in bond funds and some equity funds.

Savings in mutual funds is for many an alternative to putting the money in the bank.

Roughly speaking, consists fondsmarkedet of equity funds and bond funds.

Mutual fund place fondskjøpernes cash in Norwegian and foreign shares to a different risk.

bond funds are funds that put money into a fixed interest rate by purchasing tradable lånepapirer issued by corporations, the state or the municipalities. They can also invest in the market for short-term loans.

Kombifondene benefits the money in equity funds and bond funds.

According to the financial supervisory authority of norway has the money in the Norwegian kombifond increased by 170 percent since the start of 2013. The capital now represent 57 billion. money.

According to the industry standard to kombifond normally contain at least 20 percent bond funds.

Often it is to read between the lines in the texts from the cautious and appropriate state agencies. Accept finanstilsynet’s “tematilsyn” of kombifondene is one such text.

It gives a strong message about kombifondene people are being offered:

• They are expensive. the Management of the shares in kombifondene is generally much more expensive than for pure equity funds.
• They did not hold what they promise. “Many kombinasjonsfond” is being marketed as a product where the smart managers are changing the distribution of shares and bonds used in accordance with good analysis. It is not so, without further ado.
• Reporting to customers is poor. the Return is not specified for renteandelen and the share portion separately.
• Apples are being compared with bananas. The return of the risky renteinvesteringer is in marketing compared with the yield on government bonds that are free of risk.
• Offer is not cheap aksjeforvaltning. There is almost no offer that kombifondenes aksjedel are placed into cheap, passively managed funds, so-called indeksfond. 45 of the 47 examined kombinasjonsfond contains only aksjeplasseringer in much more expensive, actively managed fund. They pay managers to beat the broad market.

– We take this to the intelligence. It is good that the financial supervisory authority of norway to make such analyses, ” says adf. director Bernt Zakariassen in the Norwegian mutual fund association (VFF).

what you should know before you save in funds by

High-priced

financial supervisory authority of norway have checked fondsleverandørenes pricing, suppose it costs 0.5 per cent per. years of capital management rentedelen of kombifondet

the Rest of the price of kombifondet is thus related to the aksjedelen. The audit found that around 75 per cent of the kombifondene have a total remuneration that corresponds to that price on aksjedelen is higher than the 1.5 per cent pr. years. 38 per cent is over 2 per cent annual fee for the aksjedelen.

For comparison, KLP funds management calculated that the average fee for the Norwegian mutual fund is 1,43%.

the Audit concludes:

“A large proportion of the kombinasjonsfondene is priced high. Many investors can achieve lower forvaltningsomkostninger by investing separately in pure equity funds and bond funds.”

Costs to move your money

Zakariassen says the fees are determined in the market in competition between the funds.

the Audit alleges not that the competition is weak. The fee for kombifondene also reflects the cost of the transfer of money between rentedelen and aksjedelen, ” he says.

Småsparerne have lost faith in the fondsmarkedet

Little movement in the practice

financial supervisory authority of norway is aware of this flyttekostnaden.

Therefore, the audit checked whether this the actual happening, based on figures for the last three years. The audit conclusion is that “… many fund to a small extent exploit the possibility to vary the allocation between interest – rate and equity investments from the nominee market outlook”

in other words: Kombifondene does not perform what they paid for.

Fixed distribution can be good

Zakariassen seems the audit “is a bit bombastic based on the data that are investigated”.

– Little variation in the proportion of shares and bonds used in the investigated period may be reasonable, given the current market conditions, ” he says.

the Authority reviews this argument in a footnote where it shows that funds in the marketing says that the “over time exploits the frame active”.

the Message from the audit is that the marketing promises something that cannot be delivered.