ESMA REGULAR USE
                Contents
          •   Main findings
          •   UCITS analysis
                – EU aggregate analysis
                – Analysis by management type
                – Funds by domicile
          •   UCITS ESG analysis
                – Equity UCITS analysis
                – Analysis by ESG rating
          •   SRPs analysis from PRIIPs
                – Performance scenario analysis
                – Costs analysis
          •   Retail AIFs
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                                                                                                  ESMA REGULAR USE
                 Main findings
                 Retail clients continue to pay high costs for investment 
      •   UCITS funds
            – Costs only marginally declined over time 
            – Retail clients paid around 40% more than institutional investors 
            – Active net underperformance compared to passive 
            – Outperformance of ESG funds mostly driven by sectoral factors 
      •   Structural Retail Products
            – Total  costs  attributable  to  entry  costs  and  varied  substantially  by 
               country and payoff type 
            – Limited  transparency  and  comparability  across  Member  States. 
               Heterogeneity and data availability issues persisted
      •   Retail AIFs
            – Returns  in  2019  higher  than  2018  reflecting  strong  valuation  of 
               underlying assets
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                                                                                                  ESMA REGULAR USE
                 Investment funds - UCITS, EU aggregate analysis 
                 Significant cost impact
                                                      •    Costs
                                                            – Limited variability in costs
                                                            – Cost impact is higher the lower is 
                                                                the  performance:  highest  cost 
                                                                impact in 2016 and 2018 leading 
                                                                to negative net performance
                                                      •    Performance
                                                            – Strong          variations        in     annual 
                                                                performance  reflecting                market 
                                                                developments
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                                                                                                  ESMA REGULAR USE
                 Investment funds - UCITS, analysis by management type
                 Net underperformance of active funds
                                                      •    Equity funds:
                                                            – Gross outperformance of passive and 
                                                                ETFs fades away at long horizons
                                                            – However, costs significantly higher for 
                                                                active  compared  to  passive  and 
                                                                ETFs…
                                                            – …so,  underperformance  of  active 
                                                                UCITS, on average
                                                      •    Top performing funds:
                                                            – Outperformance of the top-25% active 
                                                                compared  to  the  top-25%  passive  at 
                                                                shorter horizons 
                                                            – The cohort changes over time making 
                                                                it   complicated         for    investors       to 
                                                                consistently       identify     outperforming 
                                                                UCITS 
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                                                                                                  ESMA REGULAR USE
                 Investment funds - UCITS, funds by domicile
                 Fund- and investor-domicile analysis
       •   Strong decline in heterogeneity moving from fund- to investor-domicile 
           perspective
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