Increasing fund assets is seen as a more realistic and effective avenue

Today, the European Fund and Asset Management Association (EFAMA) published the 20^th issue of its Market Insights series, titled “Beyond fund consolidation: a more promising strategy for bigger funds and faster cost declines in Europe”. This publication compares the size and number of equity UCITS with that of US equity mutual funds and challenges the commonly held belief that fund consolidation will significantly lower the cost of funds in Europe.
 

In its recently published market report on the costs and performance of EU retail investment products, ESMA asserts that there are “substantial differences in the fund cost level between the EU and the US”. In its accompanying press release, ESMA emphasizes that “the market inefficiencies revealed by this higher cost level show the need to focus on the competitiveness of EU markets, within a future Savings and Investments Union.”

IOSCO recommendations would unduly hamper investment fund risk management 

Since recent market disruptions such as the COVID-19 pandemic, the Financial Stability Board (FSB) and the International Organization of Securities Supervisors (IOSCO) have investigated how to make investment funds more resilient to liquidity shocks. The FSB published their recommendations in December 2023 and IOSCO is now looking into how to adjust their own 2018 recommendations along these lines.