Investment costs costs represent “a significant drain on fund performance”, which impacts retail investors “to a much higher extent” than their institutional counterparts.
That’s one of the key findings of a new report from ESMA, the European Securities and Markets Authority.
In its first Annual Statistical Report, ESMA also states that, net of costs, passive equity funds “consistently” outperform their actively managed counterparts.
Commenting on the findings, ESMA chairman Steven Maijoor said: ”Retail investors in the EU benefit from the choice among thousands of UCITS and alternative funds and structured investment products. It is key that they are aware of the costs and performance of these products.
“Our report shows that fund costs are substantive, can severely impact returns, and vary strongly. It demonstrates the importance of cost disclosure to investors.”
You can read the full report here: