On 10 January 2019, the European Securities and Markets Authority (ESMA) published its first annual statistical report on the performance and costs of retail investment products in the EU.

The report is focused on UCITS, alternative investment funds sold to retail investors (retail AIFs) and structured retail products (SRPs). The report provides a comprehensive overview of the EU markets and, for UCITS, a country-by-country analysis covering the period from 2008 to 2017.

Key points to note in the report are:

  • with regards UCITS, gross performance follows the behaviour of the underlying asset classes. This together with the underlying national market structures, has a significant impact for the results on a country by country level;
  • actively managed equity UCITS provide a slightly better gross performance than passively managed funds, even though the margin is small;
  • the largest impact for UCITS funds comes from ongoing costs. Subscription and redemption fees have a significantly lower impact;
  • as of end 2017, investments by retail investors in AIFs occur in 39% of funds account for 18% in terms of NAV;
  • 91% of the assets of AIFs sold to retail investors are managed by authorised AIF managers; and
  • the large variety of SRPs complicates analysis of costs and performance. With the exception of a few types of structured products such as some tracker certificates, most structured products offer investors a return that is non-linear in the return of the underlying, contrast to long-term investment products such as funds, which offer full participation in the underlying. The scope for conclusive analysis is also severely constrained by data availability.