The Swedish Fund Selection Agency (Agency) (Fondtorgsnämnden in Swedish), is in its first year of operations and is responsible for procuring a wide selection of funds of high quality and different risk profiles for the country’s premium pension fund platform, part of the state pension system. Savers can select up to five funds on the platform to form their first pillar pension portfolio.

In its first year, FTN has focused on actively managed European equity funds with a primary focus on investments in the large and mid-cap sectors, with mandates valued at around SEK11bn (€965m). Over the next few years, it will become one of the most active fund selectors in the world with more than €83bn worth of capital to allocate. It moved from merely avoiding poor-performing fund managers to actively selecting high-quality managers and prioritising the end saver as the most important stakeholder.

To allow savers to select funds of the highest quality at a good price, it has placed stringent requirements on new and existing funds and fund managers. They must have solid investment strategies and have built resilient organisations, supporting strong performance over time.

The Agency’s ongoing monitoring of fund managers has resulted in several terminations of fund agreements. This mainly concerned fund managers with assets outside the premium pension system of less than SEK500m, raising stability concerns as they were overly reliant on one source of investment.

It has also developed a comprehensive list of mandatory sustainability requirements at both fund manager and fund level. These will be integrated into the assessment of each fund and in the fund agreements. These go beyond the EU’s Sustainable Finance Disclosure Regulation requirements and include norm-based screening and assessment of funds’ alignment with the 2015 Paris Agreement.