How to Invest the Swedish Occupational Pension - Are there any simple and easily applicable pension investment strategies generating better alphas than the Default Options do?
Abstract: During the last couple of years the Swedish Occupational Pension plan has gone through some alterations. Today the risk of future wealth lies with each individual and how to invest the pension contribution is a major decision for every Swede. Using a sample containing the development of 1532 PPM funds between 2000-2013, this paper compare simple and easily applicable investment strategies to the Default Options. Through investigating the ability of fund managers to generate alphas, 16 strategies are compared to the Default Option. In addition an examination of the Occupational Pension Plan is presented. The aim of the study is to provide guidance in the choice of investment, either through a strategy to apply or through a reason to actively choose the Default Option. The study concludes that less than 42% of the PPM fund managers generate positive alphas and the evidence suggests that the Default Option significantly outperform all examined strategies during the period of study.
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