ESMA finds that distribution costs account for almost half of the total costs paid to invest in UCITS
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has published its report on total costs of investing in UCITS and AIFs. This is the first comprehensive assessment of the total costs charged to investors in EEA investment funds.
Notably, the report provides an innovative analysis on distribution costs, which account for 48% of total costs for UCITS. These high costs are primarily driven by the traditional and dominant role of credit institutions and investment firms in the distribution chain across many Member States. In contrast, digital platforms - such as neo-brokers offering execution-only services - are less expensive.
The report also confirms that inducements play a central role for ongoing costs. When there are inducement agreements between the distributor and the manufacturer of a UCITS (non-independent advice), these payments account for up to 45% of the ongoing costs.
Next steps
This analysis was enabled by an ad-hoc data collection exercise and provides a useful contribution to the ongoing SIU debate, especially in relation to retail participation.
ESMA will present the main findings of today’s report during a webinar on 12 November between 10.00 and 11.00. Register here.
Further information:
Solveig Kleiveland
Team Leader - Communications
press@esma.europa.eu