ESMA: Investment product performance deeply impacted by charges

ESMA bond liquidity data

Pan European regulator the European Securities and Markets Authority (ESMA) has just published its first Annual Statistical Report on the cost and performance of retail investment products.

The regulator includes the lack of available and usable cost and performance data as a highlight, claiming that it could cause problems from an investor protection perspective.

LeapRate reminds that two weeks ago, ESMA decided to extend its CFD and Forex leverage cap (and related rules) for a further three months. The three month trial has already ended on November 1, 2018.

Steven Maijoor

Steven Maijoor, ESMA

Steven Maijoor, ESMA Chair, commented:

The Report is an important building block in our investor protection work. Retail investors in the EU benefit from the choice among thousands of UCITS and alternative funds and structured investment products. It is key that they are aware of the costs and performance of these products.

Our Report shows that fund costs are substantive, can severely impact returns, and vary strongly. It demonstrates the importance of cost disclosure to investors, and the need for asset managers and investment firms to take costs into account when acting in the best interest of investors. This evidence should prompt investors to carefully compare the costs of investment products when making investment decisions.

Costs, their level and structure are relevant for investor protection, and we will monitor and assess what the evidence implies for our supervisory convergence work.

The official announcement can be seen here.

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