A new finding this year is that UCITS with an environmental, socialand governance (ESG) strategy (including equity, bond and mixed funds) outperformed their non-ESG peers, and were also overall cheaper.
The European Securities and Markets Authority (ESMA), the EU securities regulator, today
publishes its fourth annual statistical report on the cost and performance of European Union (EU)
retail investment products.
The Report examines the market over the ten-year period ending in 2020 and finds that, while
costs show signs of reducing in certain jurisdictions, in most Member States as well as in the EU
as a whole there is limited progress in funds becoming more affordable. Retail investors also
continue to pay higher fees than professional investors.
The main findings in the report are:
• Gross performance: Gross performance in 2020 was low or negative and highly volatile
due to the COVID-19 pandemic. Investing long-term significantly reduces the risks related
to sudden and large changes in the valuation of financial products;
• Costs: Costs remained a critical component when evaluating the ultimate benefits of an
investment, they reduced only marginally over time. Total costs were higher for retail
investors than for institutional investors, on average. Costs for cross-border funds were
higher than those for domestic funds;
• ESG UCITS: ESG equity, bond and mixed funds were overall cheaper than non-ESG
peers, while their performance reflected the strong performance of specific sectors since
the COVID-19 crisis. Within the ESG fund category, impact funds performed better than
other ESG strategies and funds with sustainable investment as objective performed better
in net terms, after having included costs, than those promoting environmental or social
characteristics despite slightly higher costs;
• Structural market features: 15% of the managers of UCITS in our sample managed 90%
of assets. Cross-border funds were, on average, larger than funds sold only in their home
market and on average 60% of funds included in the sample were effectively sold cross-
border. Heterogeneity across Member States persists;
• Performance and costs by management type: Costs were significantly higher for active UCITS than for passive funds and ETFs. ETF UCITS performance was in line with that of
other passive UCITS investing in similar assets;
• Retail AIFs: In 2020, retail investors accounted for only 13% of the total Net Asset Value
(NAV) in the EU AIF market. As for UCITS, the annualised monthly gross and net
performance across the main retail AIFs fund types, significantly decreased compared with
2019. A full costs analysis could not be carried out due to the unavailability of data on cost
composition; and
• Structured Retail Products: Total costs were largely attributable to entry costs and varied
substantially by country and by pay-off type, but they did not depend on issuance size or underlying type.
ESMA
© ESMA
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