The costs of investing in EU financial products is on a downwards trajectory, but “at a low and varying pace,” according to the European financial regulator.
Despite the fall, the European Securities and Markets Authority (Esma) has found that cost levels for funds in the EU remain high by international standards.
Esma’s seventh annual market report on the costs and performance of EU retail investment products found that, with more than 50,000 funds and an average fund size almost 10 times smaller than that of for example US mutual funds, EU funds do not exhaust the economies of scale commensurate with the EU’s single market.
“The market inefficiencies revealed by this higher cost level shows the need to focus on the competitiveness of EU markets, within a future Savings and Investments Union,” the report found.
Other findings of the report are that:
UCITS costs are declining gradually, but from high levels costs and have not dropped for all categories of funds: ongoing costs of mixed funds and equity passive funds have been relatively stable over time.
UCITS performance slightly improved with returns increasing in 2023 but remaining far from their 2021 levels. The annual net performance of bond and mixed funds improved between 2022 and 2023 but remained in negative territories.
