The European Fund and Asset Management Association (Efama) has concluded that US mutual funds are not necessarily cheaper than their Ucits European counterparts in its recent “The Cost of Ucits and US Mutual Funds – We can only compare like with like” report. Ucits, according to the report, do not always cost more than US mutual funds, invalidating the frequent argument that Europeans cannot completely benefit from the single market for investment funds.
The report also found that the average cost of actively-managed long-term and index-tracking equity funds is a tad lower in Europe than in the US. Moreover, US mutual funds’ costs can be just as high or even higher than Ucits, generally, when US investors buy financial advice.
Efma said the report’s findings gave evidence that an EU-wide ban on “inducements” would not result in lower prices for retail investors due to the unbundling of product and distribution costs. Additionally, it said the report indicated that investors cannot distinguish if they are paying for investment advice, a financial product, or both.
Bernard Delbecque, senior director of economics and research at Efama: “Our findings highlight the significance of two policy objectives for the European Union: the need to further deepen the single market for Ucits and the importance of achieving the Capital Markets Union project, in particular in the area of pensions and investor education.”