High annual returns of nearly 8% with stock investments.
A new study by the European Fund and Asset Management Association (Efama) sheds light on the returns and costs of investment funds in Europe. The study, aimed at promoting investment funds, offers insights into the fees and returns trends for European equity, bond, balanced, and cash deposit funds.
The study reveals a significant decline in average fund costs over the past few years. For equity UCITS funds, fees have decreased by about 21%, reaching an average charge of 0.75% by 2024. Bond UCITS fund fees have declined to 0.56%, while multi-asset (balanced) UCITS fund fees have fallen by 8%, albeit remaining the most expensive at 1.16%.
Cash deposits and money market funds (MMFs), often used as cash equivalents, show a relatively low expense ratio around 0.37%. The yields on these MMFs have increased notably since 2019, with a 7-day gross yield rising from 1.72% at year-end 2019 to about 4.38% in mid-2025.
Regarding the average annual returns from 2010 to 2019, the study does not provide specific figures for European equity, bond, balanced, and cash deposit funds. The studies mostly focus on recent fee trends and market structural changes such as increased passivity and scale.
In terms of returns, European equity funds have averaged an annual return of 11.0% over the past decade. Balanced funds have delivered a gross annual return of 6.3% and a net annual return of 3.0% after costs and inflation. Bond funds yielded a gross annual return of 5.1% and a net annual return of 2.3% after costs and inflation.
The study also analysed the growth of 10,000 euros in each fund category. If invested in equity funds, the same 10,000 euros would have grown to 20,784 euros. A combination of all three fund categories (equity, balanced, and bond) would have resulted in 16,104 euros. However, cash deposits resulted in a real loss of 1.0% per year after costs and inflation.
The study did not provide information on the specific costs considered in the calculations of net returns or the ongoing charges (OCF) for balanced and bond funds. The ongoing charges (OCF) for all new equity funds launched in 2020 were 0.81 percent, a slight decrease from the average OCF for all considered equity funds at the end of 2020 (1.39 percent).
For those seeking more detailed fee data or precise annualized return figures from 2010 to 2019, consulting the original EFAMA study or their annual reports directly is recommended. The study analysed all funds that comply with the European fund directive UCITS from 2010 to 2019.
The study's findings underscore the ongoing focus on fund costs by regulatory authorities like ESMA, with a push for transparency and reductions in fees across European funds. Larger funds and ETFs have been gaining market share over smaller funds, driven by investor preference for lower fees and scalability, which also contributes to the downward pressure on costs. For cash equivalent products (money market funds), expense ratios are stable, and yields have risen recently due to changing interest rate environments.
Personal-finance enthusiasts might find the study interesting, as it explores fee trends and returns for various investment funds in Europe. In the realm of equity UCITS funds, the average charge has decreased significantly over the years, reaching 0.75% by 2024. With regards to insurance and finance, the findings demonstrate the significance of cost assessments when choosing investment funds; for instance, bond UCITS fund fees have been reduced to 0.56%, while multi-asset (balanced) UCITS fund fees have fallen by 8%. Investors would also benefit from knowing that cash deposits and money market funds (MMFs) show a relatively low expense ratio around 0.37%.
