SWEDEN - The default investment option for Swedish investors will now be lifecycle funds, after a government directive mandated that individuals' assets should de-risk as they age, confirmed Richard Grottheim, executive vice president at AP7.
AP7 runs the country's SKR75bn (US$10.74bn) in default assets through the Premium Savings Fund and the Premium Choice Fund.
"We are very happy about this new directive that the government has issued," said Grottheim.
Through the new lifecycle fund, individuals will be fully invested in equities until age 55, after which the fund would gradually de-risk. By age 75, the assets will likely be evenly split between equity and fixed income, said Grottheim.
Grottheim said he expects the lifecycle funds, which will be set up to take investors through to end of life, to be running in May 2010.
He said the government began discussing the possibility of using lifecycle funds about eight years ago.
"At that time, we didn't think it was necessary," he said. "Now it's important to have individuals adjusting for risk in the default option."
The current Premium Saving Fund invests 90% of its assets in equity, with the rest in fixed income. The Premium Choice Fund, which will be dissolved once the new system goes into effect, invests 100% in equities.
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