Best way to invest in Sweden?

As readers may have noticed, I’m a contrarian when it comes to COVID-19 (along with the 60,000 physicians and PhDs who’ve signed the Great Barrington Declaration). To me, the untested “experiment” is locking a country down and closing schools in hopes of winning a war against a respiratory virus. It is not an “experiment” to stay open, as Sweden did (and as the W.H.O. recommended through 2019), and continue to educate children, continue to go to work, continue to hit the gym, continue to socialize with friends and family, etc. I don’t think the U.S., for example, will be better off as a result of shutting down, closing schools, buying and wearing cloth masks that have been shown to be worthless, etc. I do think the Swedes will prosper in the long run due to superior mental health, a focus on something other than COVID-19, their kids having an extra year of in-person school compared to kids in U.S. cities, etc. I want to invest in Sweden with a 10-20-year horizon.

(Based on our devotion to the Vietnam and Afghanistan wars, we could still be fighting the COVID-19 war 10-20 years from now! Even if we aren’t, the misallocation of $trillions from the past 1.5 years, e.g., paying people to stay home for 1.5 years ($800 billion just from federal tax dollars), giving $3,600/year extra per child to successful child support plaintiffs, funding highway repairs in the least efficient states (the new “infrastructure” bill, which builds infrastructure everywhere other than in the states that actually need it due to growing population?), etc., will be a comparative drag on the U.S. economy.)

What’s the best way to invest in Sweden? My usual preference is for common stocks, but apparently a lot of these can’t be purchased in the U.S. There is an ETF that tracks the Swedish market: EWD from iShares. The dividend yield is medium (just under 3%), which I hope means that capital appreciation is expected. Somehow, 77 percent of the yield is classified as “qualified” (I’d thought that this was for U.S. stocks) and therefore subject to a lower federal tax rate (if the Democrats are successful with their latest federal tax increase, the result will be a dividend tax rate of about 50 percent for Californians (fed+state) and this will be on top of higher corporate taxes (i.e., something like 75% of a company’s profits that would have belonged to shareholders will instead go to pay taxes); things are a little less grim for residents of Florida).

The big negative of this iShares fund is a 0.51 percent management fee. They’re just trying to track the index, so it is unclear what you’re paying them for (how hard is it to buy and hold 53 stocks?). The fee for the Vanguard S&P 500 ETF is 0.03 percent, which is also the fee for the corresponding iShares S&P 500 ETF.

The big negative of Sweden as an investment, if you’ve been reading this blog, is that I don’t believe the prevailing American dogma that low-skill migrants make a country richer (if they did, Canada and European nations would be vying for and paying for the opportunity to fly low-skill migrants from our southern border to their respective countries). At 25 percent, Sweden has, I think, the highest percentage of immigrants or children of two immigrant parents, of any country in Europe. If these folks prefer not to work, that could be a drag on the Swedish economy (via welfare costs) for the next 100 years. See “‘New Swedes’ left out as economy powers through pandemic” (Reuters, March 17, 2021):

Sweden has powered through the COVID-19 crisis with an economy set to regain its pre-pandemic size by late-2021, but a surge in unemployment among its foreign-born citizens risks exacerbating social divisions for years to come.

Ajlan came to Sweden as a 17-year-old from Baghdad in 1993. Despite graduating with a degree in Middle Eastern Studies from Lund University – one of the country’s best schools – he only found work as a taxi driver.

A rigid labour market and a lack of low-skilled jobs means Sweden has been poor at integrating waves of immigrants, or “new Swedes”, since the 1970s – a social and economic divide that has been widened further.

Unemployment among foreign-born workers stood at 18% in the fourth quarter of last year, up 3.5 percentage points from a year earlier, according to Statistics Office data. For people born in Sweden, it was 4.1%, up just 1 percentage point.

Immigration has been running at high levels for the past two decades in Sweden, with a record 163,000 asylum seekers arriving in the country of 10 million in 2015.

The government has launched a raft of measures – some of which predate the pandemic – aimed at getting people into work, including subsidized employment, tax breaks for employers, on-the-job training schemes and its “knowledge-lift” programme that offers study opportunities for the unemployed.

In other words, the Swedes don’t have any better idea of what to do with low-skill migrants than we do. They’re on the same “provide free housing, free health care, free food, and then ask people nicely if they would like to work” plan (maybe the Swedes don’t offer an Obamaphone, but mobile phone service in Europe is much cheaper than in what we call our competitive market).

On the third hand, the U.S. and all of Europe are going to be packed with low-skill migrants for the foreseeable future. The only way to short the idea of a migrant-packed welfare state is to invest in Asian countries that are closed to low-skill immigration and that, in any case, don’t offer the multiple generations of free housing, health care, and food that the U.S. offers and that some European countries offer (albeit at a less generous level; see Hartz IV in Germany, of which 55 percent of the recipients are migrants or children of migrants: “According to the Federal Employment Agency … this was due to the migrants lacking either employable skills or knowledge of the language”).

Vaguely related… the Volvo-driving migrants arrive in Stockholm on the ferry from Finland (2016):

17 thoughts on “Best way to invest in Sweden?

    • TS: Buying and holding the S&P 500 and world stock markets is not contrarian, so I’m not a contrarian investor!

  1. Professor *AND* Doctor Alan Chartock from WAMC Great Barrington (NPR) is also a contrarian when it comes to the people who promulgated and signed the Great Barrington Declaration, because when he got wind of it, “FURIOUS” with them and has referred to them as (I’m loosely paraphrasing) basically a bunch of hoodlums and quacks who usurped the name of his homeland and whose solution to COVID is to just “let them die.” He’s always fun to listen to, and I unreservedly recommend his morning commentary. Don’t miss it!

  2. Buy Investor AB shares for a broad exposure to the Swedish market. Their latest annual report will explain the company. You can buy ADRs in the US or local shares through Interactive Brokers.

    • Jack: Thanks for that! It looks like is sort of like Berkshire Hathaway. They do pay a dividend, however, and it is unclear to me what percent of the dividend is qualified (for lower-than-ordinary-income rates). Also, I can’t figure out what fees the ADRs incur. That seems to be an opaque area of Wall Street! I wonder if the folks who run the ADR can skim off 0.51% every year!

    • Investor IB is almost certainly a PFIC(passive foreign investment company, IRS 8861) as are perhaps all foreign mutual fund (not US mediated). A PFIC shareholder taxation by the US such that it does not in general makes sense to be one.

      Individual foreign shares or bonds may be a different matter.

    • I’d say Investor is a good choice. It’s the Wallenberg control company. Another classic in the same sector is Industrivärden AB, which I think is a bit more conservative.

      If you want a broad index fund, Avanza Zero is nice.

      Not sure how to best get exposure to the Swedish startup scene, which has provided some hits over the years.

    • Tom, it does not matter whether or not Investor per se is a good choice. Any PFIC for a US resident is not a good choice.

    • Sorry, not familiar with US tax law, so please do not consider this investment or tax advice. Please consult your CPA and/or tax attorney before taking any action.

    • Steven: I don’t know how anyone can say that Denmark “handled the covid pandemic better” in a values-neutral way. From the perspective of a child, I don’t think it is obvious that Denmark was “better” than Sweden. The child’s school in Denmark was closed; the child’s school in Sweden was open. We have the same issue here in the U.S. People who think schools should be closed would say that California “handled the covid pandemic best”. People who think schools should be open would say Florida handled it better.

      Separately, how does that presentation you cite show that Denmark is somehow better off economically than Sweden? (I don’t doubt that Denmark could be richer per capita than Sweden since 25% of “Swedes” are low-skill migrants or children of low-skill recent migrants; this is a bit like the U.S. where politicians will bring in 50 million immigrants who don’t speak English and have no job skills and then remark on the shocking amount of income inequality in the U.S.) The authors of the presentation you cite say that they expect 4.5% GDP growth in Sweden for 2021 and 3.3% for Denmark. They expect 3.9% growth for Norway (not sure how they can predict GDP growth for Norway without a letter from God telling them what the oil price will be for the rest of 2021).

  3. As the Nordea report says Denmark is really busy at the moment. Actual GDP growth numbers can be found at

    Fewer dead danes than swedes is a succes parameter. 60% of all adults and children learning how to work from home for 2*3 months i 2020 and 2021 is another source of succes in 2022 I’d say.

    I’ve noticed a few office lifers suddendly getting more efficient. It’s anecdotal. But I’m quite sure things will get more efficient in Denmark in the coming years.

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