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New research shows European funds are failing retail investors

by | 14 May, 2018

Thumbs down for fund performance in Europe

New research shows less than 1 in 5 funds sold to retail investors in Europe in the past 3 years outperformed their benchmark after fees were taken into account, according to Italian consultancy firm Prometeia.

The company examined the 3-year record of 2,500 equity, bond and money market funds across Europe, finding that less than a quarter beat their benchmarks. The findings also showed there was widespread misalignment between the fee structures of the funds and their expected returns too. Claudio Bocci, head of the asset management advisory team at the firm said: “Many managers are unable to compensate for fees because they are not taking enough active risk, so they are very unlikely to beat their benchmark.” The research showed huge gaps also exist between the best and worst managers across all fund types, complicating decisions for retail investors even further.

The bleak findings drew some close parallels with a report from the European Commission last month, which showed new retail investors across Europe were struggling with investing due to poor advice from financial institutions and their own low levels of financial literacy, alongside being offered a limited selection of financial products to choose from by banks, many of which not only underperformed but also charged extortionate fees.

Research like this reaffirms to us at Invstr that we are doing the right thing by championing self-directed investment as well as lowering the barriers to entry for new investors with our affordable and easy-to-use Portfolio feature.

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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