Andreas Dolezal | Transfer Courier
Investment products for retail investors are closely monitored by the European Union Supervisory Authority.
European Securities and Markets Commission Esma In its market report, the topic is the costs and performance of investment products for retail investors. Authority says Average cost of investing in the most important EU retail financial products By the end of 2022 – a year marked by high inflation and low incomes – have fallen. However, at the same time, he mentions … Costs are uneven across EU member states. “Costs and performance are key factors in determining whether retail investors benefit from their investments, and although the slow decline in costs incurred by investors is welcome, retail investors should consider costs carefully when making investment decisions,” says Verena Ross, ESMA. -President, regarding the results.
Costs will decrease
Classic Retail Funds (UCIDS Funds) is the largest sector for retail investors in the EU. ESMA's model includes assets worth around 8.4 billion euros, of which retail investors held around 5.5 billion euros in 2022. Finance costs, including ongoing and one-time charges, continued to decline, confirming the trends of previous years. Cost differences between EU member states persisted.
While the costs of actively managed equity funds come down, This type of fund was – unsurprisingly – more expensive than passive funds and ETFs, Hence their net performance was comparatively low on average. To invest €10,000 in mutual funds over ten years, investors paid around €2,000 in expenses. The income received after this period, taking inflation into account, is a net worth of 14,850 euros and an actual net worth of 13,500 euros.
Non-ESG products lagged short
Funds with an ESG focus reduced their non-ESG activities on average in 2022. ESMA attributes this to the effects of the energy crisis and the associated rise in energy prices. Nevertheless, ESG funds outperformed their non-ESG peers over a three-year investment horizon. In 2022 Operating costs of ESG funds were lower or similar non-ESG equivalents.
From the alternative investment fund category, only real estate funds have had positive gross and net returns in the last year to 2022. However, ESMA says that real estate markets face significant challenges from 2022 onwards, which will affect the future performance of real estate funds when interest rates rise further in 2023.
Clear and detailed Information about investment products Small investors can help investors Assistance, previous performance and expenses Products supplied in the European Union to judge and promoting the participation of private investors in the capital markets.
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