Average ongoing charges for equity and fixed-income UCITS have declined since 2013,  reveals ICI Global in its latest annual research 'Ongoing Charges for UCITS in the European Union, 2022'. 
 
The trade association of asset managers worldwide also highlighted in the report that the downward trend in average ongoing charges for equity and fixed-income UCITS continued in 2022. 

Investors tend to concentrate their assets in lower-cost UCITS, and retail investors still pay for the cost of distribution even when it is not included in the total ongoing charge.

The findings further showed that cross-border UCITS provide European investors with a much larger range of investment options, but such funds often incur additional marketing or registration costs.

The report's authors said: "These findings are especially significant in the context of the Retail Investment Strategy. Falling charges and increased investment in lower-cost funds indicate that market competition is working, and that proposals for cost benchmark will lead to negative consequences for European investors, such as reduced product diversity and stifled future innovation." 

Setting the backdrop to the results, ICI Global  said the UCITS Directive has become a global success story since it was first adopted in 1985. Net assets in UCITS domiciled in the European Union and the United Kingdom were €11.1trn at year-end 2022.

Investments in these funds are held by investors from Europe and other jurisdictions  worldwide.

UCITS provide many important advantages to investors, including professional management services, access to global markets, the benefit of regulation and supervisory oversight, and access to a wide array of investment options via "passporting." For example, 
investors in equity UCITS had access to more than 120 different investment objectives with €4.5 trillion in net assets at year-end 2022.

UCITS investors incur ongoing charges that cover a host of services, including portfolio management, administration, compliance costs, accounting services, legal costs, and payments to distributors. 

The total cost of these charges is disclosed to investors through either the total expense ratio (TER), often found in a UCITS' annual 
report and other disclosures and marketing documents, or the ongoing charges figure (OCF), found in the UCITS Key Investor Information Document (KIID) or Packaged Retail and Insurance-Based Investment Products (PRIIPs).

Ongoing charges among UCITS vary, and these differences depend on a variety of factors. Because ongoing charges are paid from fund assets, investors pay for the investment-related services associated with them indirectly. The way in which fund costs are disclosed to investors has changed over time as regulation, industry practice, and the distribution landscape have evolved.