Fund Hosting Under Scrutiny: Why Finansinspektionen Fined AIFM Capital SEK 2 Million

In a decision dated 15 September 2026 and marked for announcement on 16 September, Finansinspektionen (FI),the Swedish financial supervisor, issued AIFM Capital AB a remark and an administrative fine of SEK 2 million. AIFM Capital is authorised both as a UCITS management company and as an AIFM. Part of its business is what the decision calls a fondhotell, a fund hotel. FI's English announcement describes the same activity as the company's white-label operations, or fund hosting platform, under which it manages funds at the initiative of third parties.

The decision itself (FI dnr 23-25124) runs to 46 pages, with a service receipt and appeal instructions attached to the published PDF. It sets out in unusual detail what FI expects of a host management company towards investors in funds whose portfolio management it has delegated. This article covers what FI found, which of the firm's arguments it rejected, how it set the fine, and what hosts in other jurisdictions may take from it.

1. The decision at a glance

FI opened its investigation in September 2023. It covered the period 1 January 2021 to 13 September 2023 and was ultimately restricted to AIFM Capital's management of UCITS, its business as a fund management company.

For context, the decision gives fund counts for the wider business, which included both UCITS and AIFs. Across the period AIFM Capital managed between 14 and 30 funds, and between 5 and 13 of them were managed by initiators under delegation agreements. In every case, only portfolio management was delegated.

FI identified two sets of failings:

• Entering delegation agreements without following the firm's own internal delegation instruction and without a sufficiently thorough evaluation of the mandate and the delegate.
• Monitoring delegates without paying sufficient attention to whether unitholders were receiving returns that were as good as possible relative to each fund's predefined risk profile.

FI concluded that the firm breached Chapter 14, Section 2 of FI's fund regulations (FFFS 2013:9),which requires skill, care and diligence when entering into and managing delegation agreements and requires the firm to ensure that delegates perform effectively. It also breached Chapter 2, Section 17 f of the Swedish UCITS Act (2004:46),which requires a management company to act professionally, maintain public confidence in the fund market, and have adequate resources and procedures.

2. Why FI sees particular risks in fund hosting

An initiator, in FI's terminology, is a legal entity that does not itself hold authorisation as a UCITS management company or AIFM but wants to manage a fund under the authorisation of one that does. The host applies to FI for authorisation to manage the fund and then delegates portfolio management to the initiator.

Before turning to the breaches, FI explains why delegating to an initiator brings particular risks on top of those present in any delegation. Two features stand out.

No competitive selection. The host normally appoints the initiator without a conventional competitive selection process. In more traditional delegation, the management company would usually compare several candidates and could set aside one that looked less suitable than the others. In fund hosting that comparison does not normally take place, and FI's view is that the host's assessment of whether the initiator is a suitable partner therefore risks being less rigorous.

Someone else's brand. Hosted funds are usually marketed under the initiator's name or brand. Investors may see the initiator as fully responsible, and negative outcomes may be associated mainly with the initiator rather than the host. FI notes that this can mean the host has weaker incentives to ensure the initiator manages the funds well.

FI's conclusion is that these risks can be managed, but only if the host meets its obligations both when it puts the delegation in place and when it monitors it afterwards.

Practitioner interpretation: FI does not set a separate, higher legal standard for fund hosting. It identifies risks specific to the initiator relationship. In practice, a host should assess each initiator on its merits, as it would any other delegate, and document the risks that the relationship itself creates.

3. Failure one: the delegation agreements

AIFM Capital's board had adopted an internal delegation instruction. It required the board to decide on any delegation, after reviewing a draft agreement and documentation covering the financial and efficiency benefits, strategic significance, due diligence results, conflicts of interest, a risk assessment, and contractual arrangements including a contingency plan.

FI examined two delegations against that standard.

Ericsson & Partner Edge. On 21 June 2021 the board adopted the fund rules and instructed management to continue working towards a delegation agreement with the initiator. The board saw the fund rules, prospectus and key information document, but no draft agreement and none of the documentation the instruction required. The CEO signed the agreement on 25 January 2022. The board took no further decision in between. The firm argued that the June 2021 resolution was itself the decision and that the board later saw the required information through the notification filed with FI and an updated business plan. FI rejected both points. It characterised the June resolution as a decision on direction, and found that neither the notification nor the business plan contained the required analysis of benefits, impact on the business or risks.

The Case funds. On the morning of 12 May 2022 the CEO signed a delegation agreement with Case Kapitalförvaltning covering four funds. Later that day the board met and resolved to take over the funds from their previous manager. It was not shown the delegation agreement. On 8 June 2022 the board resolved to enter into the delegation agreement, by then already signed, supported by an undated due diligence form that the delegate had completed itself. FI noted that the form contained facts about the delegate but no assessment by AIFM Capital, and the board received none of the other documentation its own instruction required.

The firm argued that the agreement only became effective in December 2022, by which time the board had approved it. FI held that this did not change who had taken the decision or what information the board had when it did.

The governance point: FI's position is that adopting a sound internal policy is only the first step. The policy protects investors only if it is followed. A due diligence file built from the delegate's own answers does not amount to an evaluation by the management company.

4. Performance oversight that did not connect returns and risk

AIFM Capital split its oversight into two strands. A qualitative review, run by operations and the risk function, covered the agreement, the delegate's organisation, ownership changes and control function reports. A separate performance process, run by the investment function headed by the CEO, followed fund returns across all funds, internal and delegated alike.

FI accepted that the qualitative review had a purpose. But neither the delegation instruction nor the operational support document required any review of fund performance, and the qualitative reports did not address it. The question was therefore whether the performance process gave the board what it needed. FI assessed each type of document the firm relied on:

• Annual and half-yearly reports, prospectuses and key information documents. The annual and half-yearly reports were each produced once a year, and prospectuses and key information documents were updated at least annually. They contained historical performance against benchmarks and, in the reports, brief high-level commentary. FI found that they are designed for external readers and lacked the analysis and conclusions typically needed for internal oversight, including performance against benchmarks over periods shorter than a year, or six months for the half-yearly reports, and performance relative to risk.
• NAV reports showed the current and previous day's NAV and the daily change, with no information on risk.
• Quarterly reports showed long-run charts of each fund against its benchmark, with no figures for specific periods, no assessment of whether funds were meeting their objectives, and no information on risk.
• Monthly reports were introduced from April 2023, after FI had asked questions about performance monitoring. The board saw the April and August 2023 reports. Every delegated UCITS fund listed in them was rated green.
• CEO reports were slide presentations with brief comments that supported an oral presentation. Board minutes for the period recorded no discussion of fund performance or objectives, and FI did not accept that undocumented oral reporting filled the gap.
• Risk function reports. The quarterly risk reports generally included returns over certain periods and risk levels expressed as standard deviation, but did not relate the two. The annual risk reports contained no numerical performance data. The liquidity stress-test report submitted to FI did not address performance.

FI set out the performance of five delegated funds, each measured from launch or from the date AIFM Capital took over management:

Source: FI decision, page 26 of the PDF. Figures run to 30 June 2023. Benchmark data is from Morningstar, except for Case Hållbar Select (fondbolaget.se). For Ericsson & Partner Edge, the last reported result is dated 12 June 2023, and the composite benchmark is 90% VINX Benchmark Cap PR SEK and 10% Morningstar Can 30 Day T-Bill GR USD.

On these figures, the simple shortfalls against benchmark were 38.50 percentage points for Aktiehuset Fond, 19.71 for AuAg Silver Bullet and 4.08 for Vinga Corporate Bond. These are not risk-adjusted measures. FI itself refers to them in rounded terms, as roughly 38, 19 and 4 percentage points.

Two further examples in the decision show how the monthly reports were assessed.

Case Småbolagsfond. Over the year from 1 September 2022 to 31 August 2023 the fund returned roughly minus 7%, while its benchmark, the Carnegie Small Cap Return Index, returned roughly plus 3%, a gap of about ten percentage points. The monthly reports explained this as a harder market for smaller companies than for larger ones. FI pointed out that the benchmark was itself a small-cap index that should have faced comparable difficulties. AIFM Capital objected that it had only taken over the fund on 1 December 2022. It cited a shortfall of 3.28 percentage points for 1 December 2022 to 1 August 2023, a period that ends a month before the comparison period does. The decision records the company's figures as a fund return of -7.49% against a benchmark return of -4.20%. Those rounded figures subtract to 3.29 percentage points, and the decision does not explain the 0.01 point difference. FI's response was that the shorter period of management did not make the earlier history irrelevant to internal monitoring of the fund.

Ericsson & Partner Edge. On 9 February 2023 the board decided to wind the fund down because it had not delivered as expected. The April 2023 monthly report nonetheless gave it a green rating and a comment that its year-to-date return was in line with broad indices. FI criticised that assessment because it did not reflect the board's own decision two months earlier. The fund was wound down in June 2023.

Why it matters for oversight: FI reads the duty to ensure that a delegate performs effectively as covering returns relative to the fund's risk profile, with return and risk assessed together. Checking the contract, the organisation and the control reports is necessary but not sufficient. FI found that the colour ratings, all green while several funds trailed their benchmarks since launch, had very limited value as an oversight tool and were in some cases misleading.

5. The arguments FI rejected

The firm contested the case on several fronts. FI accepted some of the factual points it raised, including the absence of established harm and the corrective measures taken, but none of the arguments led it to refrain from intervening:

• Legality principle. The firm said FI's requirements had no basis in law. FI held that principles-based rules leaving the method to the firm are not unclear, and that the firm had made its own choices through its internal rules.
• Formal requirements only. The firm said the breaches concerned form, and that the investigation showed no harm to unitholders, third parties or the market. FI stated that it could not establish concrete effects on the financial system or harm caused by the breaches. It nonetheless found that the breaches could not be regarded as minor, because following these rules was of great importance to a firm that had delegated a large part of its fund management within its fund hotel business.
• Implicit board decisions. The firm said the board decided implicitly to continue each delegation by receiving reports and not terminating the agreement. FI found no recorded consideration of whether any delegation should continue.
• Remediation. The firm said it had corrected the issues as soon as it understood FI's concerns. FI took the corrective measures into account, but held that given the nature of the breaches they did not justify refraining from intervention.

6. How the fine was set

FI chose a remark rather than a warning or withdrawal of authorisation, finding the breaches not serious within the meaning of the Swedish UCITS Act. It held that a remark alone would not be sufficiently forceful and combined it with a fine.

The statutory ceiling. Under the Swedish UCITS Act, the maximum fine is the highest of three amounts: the SEK equivalent of EUR 5 million as at 17 September 2014, 10% of the company's or, where relevant, the group's turnover in the preceding financial year, or twice the profit made from the breach, where that profit can be determined. FI could not determine whether AIFM Capital had made a profit from these breaches. AIFM Capital's turnover for 2025 was SEK 79.9 million and the group's was SEK 100.6 million. Ten per cent of group turnover, just over SEK 10 million, was not higher than the EUR 5 million equivalent, so the EUR 5 million equivalent was the ceiling.

The starting point. Separately from the ceiling, FI followed its established practice of grading breaches from an amount equal to 10% of turnover, here group turnover, even where that amount is below the statutory maximum. The starting point was therefore just over SEK 10 million.

The adjustments. FI then weighed the firm's financial position, the seriousness of the breaches, the firm's degree of responsibility and the corrective measures it had taken. FI had not previously intervened against AIFM Capital, so there was no prior breach to count as an aggravating factor, and FI found no other mitigating or aggravating circumstances. It reduced the fine somewhat because of the length of the proceedings, noting that the investigation period had ended three years earlier. The result was SEK 2 million.

7. What this means for hosts in other jurisdictions

The following section is practitioner interpretation, not part of FI's decision.

The decision applies Swedish law and does not bind other supervisors. The principle underneath it, however, comes from EU law. Article 13(2) of the UCITS Directive provides that a management company's liability is not affected by its delegation of functions to third parties, and Article 20(3) of AIFMD provides that an AIFM's liability towards the AIF and its investors is not affected by delegation.

The UK has its own framework. For authorised fund managers within its scope, which covers UCITS schemes and small authorised UK AIFMs of non-UCITS retail schemes, COLL 6.6.15AR(3) provides that the manager's responsibility for services it has retained others to perform remains unaffected. For full-scope UK AIFMs, FUND 3.10 governs delegation, and FUND 3.10.10G confirms that delegation does not affect the AIFM's liability, referring to regulation 28(1) of the UK AIFM Regulations.

For a host operating under any of these frameworks, the questions FI asked are worth asking internally:

• Decision before signature. Does the body your policy names actually decide on each delegation, and does that decision come before anyone signs?
• Your own assessment. Does the due diligence file contain the host's own analysis of benefits, risks, conflicts and impact on investors, or only the delegate's answers to a questionnaire?
• Performance against risk. Does the board receive performance against each fund's stated objective and benchmark, over defined periods, considered together with the fund's risk profile and with deviations flagged?
• Escalation that works. Do your criteria define when a fund turns amber or red, who decides what happens next, and have they ever produced a rating other than green?
• A record of the board's thinking. Do minutes show that the board considered whether each delegation should continue, rather than simply noting reports?

FI did not fine AIFM Capital for underperformance. It fined the firm because its decision-making and oversight did not meet the standard the rules require of a management company that delegates. Fund hosting is a business term. The law gives it no discount.

Know what supervisors are looking for. Enforcement decisions like this one show where supervisors draw the line in practice. Our seminars translate those findings into the controls and evidence your firm needs.

Explore seminars at cpds.academy

Sources

Finansinspektionen, FI issues AIFM Capital a remark and an administrative fine (English announcement, page dated 12 October 2026): fi.se announcement

Finansinspektionen, Anmärkning och sanktionsavgift, decision of 15 September 2026, FI dnr 23-25124: full decision (Swedish, PDF)

Directive 2009/65/EC (UCITS Directive),Article 13(2): EUR-Lex

Directive 2011/61/EU (AIFMD),Article 20(3): EUR-Lex

FCA Handbook, COLL 6.6 (including COLL 6.6.15AR): FCA Handbook

FCA Handbook, FUND 3.10 (including FUND 3.10.10G): FCA Handbook

This article summarises a public supervisory decision for educational purposes. Translations from Swedish are our own. It does not constitute legal advice.