2013 a good year for investment funds registered in Finland

Releases Press release number 7 Tuesday 25 February 2014, 12:00 PM
The aggregated capital of domestic investment funds in Finland reached an all-time high of over EUR 75 billion in December 2013. Fund capital grew at a brisk pace throughout the year, although more moderately than the previous year. The capital stock grew by EUR 8.6 billion in 2013, compared with EUR 11 billion in 2012. Growth in investment fund capital also showed a similar trend in the rest of the euro area, but was faster in Finland than the euro area average. Investment funds mostly posted positive returns throughout the year, with the exception of a minor dip in the middle of the summer. These few months of weak performance reflected concerns about the potential consequences of monetary policy tightening by the US Federal Reserve.

In 2013, Finnish households' fund investments reached their highest level for four years. All in all, households invested a good EUR 1 billion in investment funds during 2013 in net terms. Households are the second most significant Finnish investor sector, holding almost a fifth (EUR 15 billion) of the stock of fund capital. Households' fund investments were boosted by the weak popularity of deposits with an agreed maturity, due to the low-interest environment and a consequent search for higher returns from investment in higher-risk assets.

Finnish insurance corporations hold the most units in investment funds registered in Finland. Insurance corporations hold almost a fourth (EUR 18 billion) of the stock of fund capital. Similarly to households, Finnish insurance corporations made considerable investments in investment funds in 2013, in net terms EUR 1.3 billion. A significant proportion of insurance companies' fund holdings are related to unit-linked insurance policies. Hence these holdings are indirectly the assets of households and other policy-buyers. The other major investor sectors also made mainly positive net investments in investment funds in 2013.

Structural changes in the Finnish investment fund market during the year. In 2013, the number of non-UCITS funds registered in Finland decreased by 26. The reduction was primarily the result of management companies converting their non-UCITS funds into investment funds compliant with the UCITS Directive. This trend reflected the preparations being made by management companies for new obligations resulting from regulatory changes concerning the managers of alternative investment funds.

The aggregated balance sheet of investment funds registered in Finland grew more in Finland than in the euro area on average. At the end of December 2013, the aggregated balance sheet of all investment funds registered in the euro area stood at EUR 8,765 billion, about 8% higher than at the end of 2012. The balance sheet of investment funds registered in Finland grew by 13% to stand at EUR 79 billion at the end of 2013. The balance sheet growth in domestic investment funds was based on both appreciation in the value of investments, equities in particular, and new fund investments by investors. The appreciation in investment values was somewhat moderated in respect of assets denominated in foreign currencies due to exchange rate movements, since the euro appreciated against most currencies.

This information is based on the Investment Funds 2013 Annual Review published in Finnish today by the Bank of Finland. The English version of the Review will be published on 11 March 2014.

For further information, please contact:
Johanna Honkanen, Economist, johanna.honkanen@bof.fi, tel. +358 10 831 2992,
Jori Oksanen, Economist, jori.oksanen@bof.fi, tel. +358 10 831 2552.