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Overall requirements on capital management

According to the Financing Act (Sec. 13), the Fund assets shall be managed prudently to secure the financing of the future costs which the fees are intended to cover. The Asset Management Ordinance (Sec. 7) prescribes that the Fund assets shall be managed

  • in a prudent manner so that they will most likely suffice to meet the expected need for disbursements from the Fund, have a suitable level of risk and provide satisfactory liquidity, and
  • in a responsible manner with a view to environmental and social aspects, while still meeting the above requirement.

The prudent person principle

The prudent person principle provides that the manager of a fund shall invest the fund’s assets as if they were his own, but shall thereby act in the interest of the beneficiaries. The principle is aimed more at the decision process than at the result of each individual investment. No type of investment is imprudent in itself. A particular investment decision must be based on consideration of what effects the decision is expected to have for the investment operation as a whole. A highly risky investment can be acceptable if the decision is based on a carefully devised strategy, where the relevant risks are analyzed and the chances are good that the investment will contribute to a good result for the overall investment operation. However, overly cautious investments may conflict with the prudent person principle, since such investments may yield too little return and thereby not be in the interest of the beneficiaries. Furthermore, the prudent person principle entails that

  • the assets must be sufficiently diversified between and within the different asset classes,
  • investments may only be made in financial instruments whose risks the manager can identify, measure, monitor, manage and control,
  • investments must be made so that a suitable spread of risks is achieved,
  • the assets must be invested taking into account the type and duration of the investments in accordance with a matching strategy, so that disbursements can be made as needed and the expected return is sufficient,
  • the assets shall be kept so that they are readily accessible to the prudent manager.

Responsible asset management

The Board of Governors annually adopts a policy for responsible investments.

The purpose of the policy is to ensure responsible asset management. To achieve this purpose, the Fund employs a framework consisting of Swedish rules and statutes, the international UN conventions signed by Sweden, international guidelines endorsed by Sweden and Swedish positions in matters of international law.

More information can be found in the Nuclear Waste Fund's policy for responsible investments.

Division into two asset management portfolios

According to the ordinance containing the terms of reference for the Nuclear Waste Fund, the Fund’s annual accounts shall be prepared in such a manner that they show how large a proportion of the Fund’s assets accrues to each reactor owner and every other fee-liable licensee. In this context, the funds set aside under the Studsvik Act are managed in the same way as if Studsvik were yet another licensee.

The Asset Management Ordinance states that of every licensee’s share of the Fund assets, an amount corresponding to the sum of the discounted value of the expected net disbursements of Fund assets during the current calendar year and the next nineteen calendar years, but at least 60 percent of the licensee’s share of the Fund assets, shall be invested in an interest-bearing account at the National Debt Office, in treasury bills issued by the state or in debt instruments issued in accordance with the Covered Bonds Issuance Act. With this in mind, the Nuclear Waste Fund’s assets are being managed in two separate portfolios with different investment rules.

  • The base portfolio contains investments in an interest-bearing account at the National Debt Office, debt instruments issued by the state, covered bonds and derivatives whose underlying assets are debt instruments issued by the state, covered bonds or assets that relate to interest rates in Swedish kronor.
  • The long-term portfolio contains the riskier asset classes which the Nuclear Waste Fund is allowed to invest in from 20 December 2017. This means that the portfolio may contain Swedish and global equities and corporate bonds as well as derivatives for the purpose of limiting risks and rationalizing the management of the Fund assets.

The same method used in the management of mutual funds is used to keep track of each payer’s share of the funds in each portfolio. The capital in the Fund is divided into a number of equally large shares. Fee payments and disbursements relating to a fee-liable licensee lead to “purchases/redemptions” of shares. The market value (balance) of the portfolio is determined daily and “purchases/redemptions” of shares are made at the current market value.

Investments in shares in the base portfolio are made for each payer. If the requirements of the Asset Management Ordinance on a specified minimum proportion of assets of the same class as contained in the base portfolio allow investments in the long-term portfolio as well for a given payer, investments in the long-term portfolio are also made for that payer.

Uppdaterad av: Marie-louise Törnblad,  2019-06-12 17.39

Kärnavfallsfonden,  c/o Kammarkollegiet,  Box 2218,  103 15 Stockholm,  Tel: 08-700 08 00,  E-post: karnavfallsfonden@kammarkollegiet.se