FSA warns against expensive funds

FinanstilsynetOslo. Finanstilsynet.Photo: Vidar Ruud / NTB scanpix

Record low interest rates have lead many people to choose to place the money they earn in funds rather than regular bank accounts. Now  FSA  warnsthat the fees customers must pay for the popular combination funds, are quite high.

The total assets of the combined funds have grown by over 170 percent since the beginning of 2013 and now are at 57 billionkroner, the newspaper Dagens Næringsliv writes.

– For many customers it clearly pays to invest separately in pure equity funds and bond funds. Combination funds may be good products, but the prices you have to pay for using the funds are high compared to regular bank accounts and other funds,  Britt Hjellegjerde, section chief in the FSA says.

The high management fees means that the funds have to bring much better results than pure equity and bond funds to secure a return to the customer.

– To improve customers’ ability to compare the benefits of balanced funds against those of pure interest rate and equity funds, they should be informed about the fund’s returns both regarding equity investments and fixed income investments separately, and not just get overall returns, she says.

The FSA have estimated the price of the equity management to be over two percent, but the highest estimated fee they found for equity management in a single fund when they went throught the different funds and their fees, was at 3.8 percent.


Source: NTB scanpix / Norway Today