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Up to 15% of Ucits equity funds are index huggers, says Esma

“Investor protection is core to our mission and the preliminary findings raise questions that merit closer analysis. Fund managers must provide investors with information that is fair, clear and not misleading. In partnership with national regulators we are taking a closer look into this issue,” he said.

Esma only analysed Ucits equity funds domiciled in EU member states. This means that funds domiciled in Switzerland and Norway, the first country where index hugging was formerly investigated last year, were not included. Besides, Esma only focused on funds with an inception date before 1 January 2005, assets under management of more than €50m, and management fees of more than 0.65%.

The regulator gave no further detail on the particular countries and markets where it found the highest concentration of possible index huggers. It said it is now up to national regulators to take further action, since “fuller investigations on a fund-by-fund basis will necessarily fall in the remit of national competent authorities, as part of their regular supervisory work.” Esma said it will ‘coordinate’ the various national investigations. 

Part of the Bonhill Group.