Esma urges action on excessive fund costs

EU Flag MediumEsma has pushed the European Commission to clarify legislation concerning "undue costs" in investment funds.

Verena Ross, chair of Esma, said it was important to protect retail investors by ensuring investments are not burdened by unwarranted expenses.

Esma was the Commission to target costs in not only retail-friendly funds regulated by the Ucits Directive but also those typically sold to sophisticated investors and managed by firms regulated under the Alternative Investment Fund Managers Directive. 

Against the backdrop of heightened inflation and tightening financial conditions, preserving the value of investment products has become crucial, said Ross.

In a statement, Ross said: “If we want to enhance retail investors’ participation in capital markets, we should ensure that the expected return of investment products isn’t impacted by undue costs. 

“That investors get value for their money is even more important in the current market situation, with heightened inflation and tightening of financial conditions.”

The move seeks to shield investors from excessive charges and guarantee fair compensation for investments.

The European Commission is currently developing policy proposals to empower retail investors and foster their engagement in capital markets.

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