Global Trustee and Fiduciary Services Bite-Sized Issue 12 2025

COSTS & CHARGES ESMA Finds that Distribution Costs Account for Almost Half of the Total Costs Paid to Invest in UCITS On 6 November 2025, the European Securities and Markets Authority (ESMA) published a report on total costs of investing in UCITS and AIFs. This is the first comprehensive assessment of the total costs charged to investors in EEA investment funds. ESMA said the report provides an innovative analysis on distribution costs, which account for 48% of total costs for UCITS. These high costs are primarily driven by the traditional and dominant role of credit institutions and investment firms in the distribution chain across many Member States. In contrast, digital platforms - such as neo-brokers offering execution-only services - are less expensive. The report also confirms that inducements play a central role for ongoing costs. When there are inducement agreements between the distributor and the manufacturer of a UCITS (non- independent advice), these payments account for up to 45% of the ongoing costs. Other findings include: • Traditional intermediation: Credit institutions and investment firms dominate EEA distribution. • Total costs: Actual retail UCITS costs range between 0.5% of the invested amount for passive bond UCITS and 2% for active equity UCITS; AIFs costs range between 1.4% and 2.8%. • Packaged Retail Investment and Insurance Products Key Information Documents (PRIIPs KIDs) fees: PRIIPs KIDs maximum one-off fees do not reflect actual fees. • Distribution costs: Distribution represents 48% of UCITS total costs and 27% of AIFs’; distribution costs differ by provider, distributor, asset and fund type. • Inducements: Inducement agreements are widespread; they amount on average to 45% of product ongoing costs for UCITS and to 34% of product ongoing costs for AIFs. • Cost drivers: The main drivers are the type of investor, the amount invested, the distribution channel and the service offered. • Geographical differences: ESMA observed a high heterogeneity of costs across Member States. • Cost information: Distribution cost information is not fully harmonised across the different pieces of EU legislation. As a result, cost comparison between products by investors is not always possible. Link to Report here Investor Services Bite-Sized Global Trustee and Fiduciary Services QUICK LINKS Issue 12 | 2025 COSTS & CHARGES CRYPTOASSETS FINTECH FSB IOSCO OPERATIONAL RESILIENCE SAVINGS AND INVESTMENT UNION SUSTAINABLE FINANCE/ESG T+1 ASIA PACIFIC EUROPE NORTH AMERICA UNITED KINGDOM