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Tracker fund at Nordea Bank
Nordea is the second-largest bank operating in Norway. In 2014, the Norwegian financial supervisor assessed the largest equity fund managed by Nordea. The fund in question – Nordea Avkastning– had been marketed by the bank as an active fund. However, closer scrutiny found that the fund actually closely tracked the performance of an index and had not been managed in accordance with the fund prospectus and investment profile. Due to the high management fees and a low active share, the customers were not given a realistic insight into what returns were possible when investing into the fund.
According to the Norwegian Financial Supervisory Authority, Nordea violated the principle of good business practice. Nordea was told to manage the fund in a way that the shareholders could get a realistic opportunity to achieve returns beyond the benchmark index. As a result of the investigations initiated by the Norwegian Financial Supervisory Authority, Nordea chose to cut the fee from 2.0 per cent to 1.5 per cent in January 2015. The fund has also increased its active share.