Swedish Small Investors Shift from US to Domestic Funds Amid Political Concerns

Swedish small investors have recently reduced their exposure to the US market, favoring Swedish and European funds instead. This trend gained momentum after Donald Trump's return to the White House, alongside renewed geopolitical tensions and high valuations in US companies. According to Felicia Schön, a savings economist at Avanza, approximately 75% of fund savings were invested in US and North American technology and global funds in 2024, but this dramatically shifted last year. Investment in global funds dropped from 52% to 18%, while Swedish funds now account for over 50% of investments, indicating a strong domestic preference.

Despite the shift, US index funds delivered an average return of 25.1% over the past year, surpassing the 15.4% return on European funds. Schön cautions that reducing exposure to the US market may increase risks due to over-concentration in specific segments and missing out on some of the world’s largest companies. The move to focus on domestic and European investments reflects concerns over political risks and currency strength, but could lead to higher portfolio volatility.

The trend continues with technology and North American funds comprising 38% and 30% of net sales at Avanza respectively, although there is a slight resurgence of interest in global funds. Experts emphasize that short-term market moves should not overshadow long-term investment strategy and diversification.