It was just recently announced that a Swedish fund company would start to use Swing Pricing for one of its existing funds after receiving a go-ahead from the Swedish Financial Supervisory Authority. They will be the first fund company in Sweden to apply Swing Pricing.
The trigger for the fund company to apply for permission to use Swing Pricing seems to be the pandemic outbreak in the spring of 2020 when Swedish funds investing in corporate bonds had large outflows. It then became clear that they lacked essential tools for dealing with large fluctuations in the market.
Swing pricing is quite commonly used in other countries but has never been possible in Sweden before. Will more fund companies in Sweden follow?
What is Swing Pricing?
Swing pricing is a pricing technique that changes the net asset value (NAV) per investment unit. This mechanism is used to protect long-term investors impacted by other investors buying and selling units of a fund.
Significant short-term buying and selling activity within a fund can result in excessive transaction fees that impact shareholder value. To prevent these issues, fund providers use Swing Pricing to protect long-term investors from the dilution caused by shareholder activity.
We are pleased to tell you that Swing Pricing is possible on the FA Platform as the picture below shows, among other key features needed in fund management.
Want to know more about Swing Pricing on the FA platform? Leave your details below, and we will be in touch.