Assets that are covered
Investor protection covers all types of securities defined under the Securities Markets Act. You can receive compensation up to a maximum of SEK 250,000.
Some of the items covered are:
- convertible debt instruments
- forward contracts
- compound products such as equity-linked bonds
Money that is deposited before a purchase or after a sale is also covered by investor compensation. Securities or money managed in the context of individual retirement savings are not covered by investor compensation.
What applies to you as a fund saver?
As a fund saver, you own shares (units) in a mutual fund managed by an investment fund management company. The management company handles the administration, while the underlying securities of the fund are located in a separate depository institution – often one of the major banks.
The depository institution must keep the securities of the fund separate from its own assets. Therefore, if either the depository institution or fund management company fails, the securities shall be protected against the default. The depository institution also verifies that the fund management company manages the securities in accordance with applicable rules. Both the institutions that manage the securities and those that hold them fall under the supervision of Finansinspektionen (the Swedish Financial Supervisory Authority).
Nominee-registered fund units
Investor compensation may also apply if you have your fund units registered by a third-party nominee with an institution such as your bank. This entails that the institution has purchased fund units for you but in its own name. The investor compensation scheme may be activated if the institution fails and you are unable to gain access to your fund units.
The institution must always keep the investor’s nominee-registered fund units separate from its own assets. This ensures that investors will have their fund units returned to them if the institution fails. If the institution where your fund units are nominee-registered fails and you are still unable to receive them, you are protected by investor compensation.
Money that must be reported
Investor protection also covers money that is subject to accounting obligations. For example, this may be money that the institution received from you to purchase securities. The institution is then required to keep the money separate from its own assets by, for example, placing it in a separate account in a bank.