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Costs for retail fund investors in the EU remain high, according to Reuters

© Reuters. FILE PHOTO: The European Union flag is fluttering outside the headquarters of the European Commission in Brussels

By Huw Jones

LONDON (Reuters) – Retail investors in mutual funds pay 40% more costs than large institutional investors pay, making it harder for the European Union to attract broader support for its capital markets, the bloc’s securities regulator said 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 reduce returns for investors. final.

“Retail clients pay about 40% more on average than institutional investors on asset classes,” ESMA said in its report, which did not make recommendations for any regulatory action. why.

Retail investors have about 4.5 trillion euros ($ 5.38 trillion) saved in UCITS, the EU-managed fund.

Proactively managed equity and bond funds, in which the asset manager chooses the asset rather than the index passively, charges higher fees but ultimately shows less net performance than with the tracker, ESMA said. (Graphics: ESMA UCITS Graphic 2, https://fingfx.thomsonreuters.com/gfx/mkt/oakpewmgdpr/ESMA%20UCITS%20Graphic%202.PNG)

Their investment in “green” or environmental, social and governance (ESG) certification funds has increased in recent years.

The net assets of ESG funds based in EU 27 amount to 564 billion euros by the end of 2019 across nearly 1,600 funds.

“As evidence, actively managed ESG funds show lower cost than non-ESG funds, does not support the notion that there is systemic clean-up by ESG funds,” ESMA said, referring to giving an overly optimistic look at green certifications. (Graphics: ESMA UCITS Graphic 1, https://fingfx.thomsonreuters.com/gfx/mkt/ygdpzldrlpw/ESMA%20UCITS%20Graphic%201.PNG)

(1 dollar = 0.8358 euros)

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