Costs for retail fund investors in EU remain high, says regulator By Reuters

© Reuters. FILE PHOTO: European Union flags flutter outside the European Commission headquarters in Brussels

By Huw Jones

LONDON (Reuters) – Retail investors in mutual funds pay costs that are 40% higher than big institutional investors pay, making it harder for the European Union to attract broader support for its capital market, the bloc’s securities regulator said on Wednesday.

The European Securities and Markets Authority (ESMA) said in its third annual report on the cost and performance of retail investment products that costs remain high and diminish returns for final investors.

“Retail clients pay on average around 40% more than institutional investors across asset classes,” ESMA said in its report, which made no recommendations for any regulatory action.

Retail investors have about 4.5 trillion euros ($5.38 trillion) saved in UCITS, funds that are regulated by the EU.

Actively managed stock and bond funds, where an asset manager selects the assets rather than passively tracking an index, charged higher costs but ultimately showed a net underperformance compared with trackers, ESMA said. (Graphic: ESMA UCITS Graphic 2,

Investment in funds that tout their “green” or environmental, social and governance (ESG) credentials has increased in recent years.

Net assets in EU 27-based ESG funds amounted to 564 billion euros at the end of 2019 across nearly 1,600 funds.

“According to the evidence, actively managed ESG funds showed lower costs than non-ESG, not supporting the view that there is systematic greenwashing by ESG funds,” ESMA said, referring to giving an overly optimistic view on green credentials. (Graphic: ESMA UCITS Graphic 1,

($1 = 0.8358 euros)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Leave a Reply

Your email address will not be published. Required fields are marked *