Comparative figures for fund fees

Finansinspektionen, the financial market regulator in Sweden, has published a press release primarily addressed at retail investors to offer guidance to investors on choosing investment funds, particularly in view of their fees and the potential impacts of such on investment returns.
In detail, Finansinspektionen distinguishes between index funds, which mirror an equity index and typically have lower fees, and actively managed funds that aim to outperform specific indices but come with higher costs. The regulator thereby provides comparative fee figures for different investment fund types, showcasing the median fees for index and actively managed funds in both Swedish and global contexts.
Specifically, the provided data illustrates that index funds generally have lower fees compared to actively managed funds. For instance, in the Swedish context, index funds have a fee of 0.28% compared to 1.34% for actively managed funds. In a global setting, the fees are slightly higher, with index funds at 0.4% and actively managed funds at 1.35%.
Moreover, Finansinspektionen points out the potential long-term impact of fees on savings by projecting fees paid after 30 years. Using an assumed annual return of 7%, it compares the total fees paid over three decades when investing SEK 2,000 monthly. For instance, choosing an actively managed global fund with a 1.35% fee could result in significantly higher fees paid (SEK 325,661) compared to a global index fund with a 0.35% fee (SEK 84,431).
Finansinspektionen also explains the methodology behind the figures, utilizing median fees to present a more accurate representation of typical fund costs, avoiding potential skewing by extreme high or low fee values. The exact methodology used to derive the figures is provided in a separate Memorandum.
Finally, the regulator notes that index funds are good investments for „typical“ investors due to their lower costs and the assumption that savings from such fund investments will develop similarly to the chosen index. Actively managed funds, however, should only be used by „active investors“ that tend to closely monitor their investments and recognize whether or not higher fees indeed translate into better investment returns.