Bank of Italy and Consob draw attention to costs initiated by UCITs
The Bank of Italy and Consob have issued a joint warning on the costs to be borne by UCITs (OICVM) as part of the 2021 ESMA supervisory action.
The call for attention highlights how costs affect the ability of managed funds to adequately pursue their investment purposes.
The annual statistical report of the European Securities and Markets Authority (ESMA) on the costs and performance of products marketed to retail investors and, in particular, UCITS funds (last published, April 5, 2022 – ESMA 50-165-1677) highlighted that the costs of UCITS absorb a major part of the performance of such products.
The results of the analysis conducted domestically on a sample of SGRs representative of the domestic asset management industry are in line with those published by ESMA in its final report dated May 31, 2022 (ESMA 34-45-1673).
ESMA’s annual statistical report’s investigation of the costs and performance of products offered to retail investors and, in particular, funds finds that the costs of UCITS have a major impact on the returns of these products.
Subsequently, during 2021, ESMA coordinated the conduct by national authorities of a “joint supervisory action” aimed at verifying compliance with the general principle that UCITS and its investors should not be charged unjustified costs (Article 22(4) of Directive 2010/43/EU implementing the UCITS Directive). The outcomes of this exercise were published by ESMA in the final report dated May 31, 2022 (ESMA 34-45- 1673).
The Bank of Italy and Consob declare that the results of the supervisory action carried out at the national level on a sample of Asset Management Companies (SGRs) are consistent with those identified by ESMA.
The results of the supervisory action brought to light several attention profiles and best practices, based on which it was possible to identify some general principles concerning the phases:
- definition;
- governance and controls;
- Management of conflicts of interest related to the costs allowed by UCITS;
- Efficient portfolio management techniques and related pricing processes by managers.
Consult the documentation: