The president of the National Securities Market Commission (CNMV), Rodrigo Buenaventura, advocates equalize the tax treatment of ETFs with that of investment funds as a way to reorient the debate on the cost of investment products in the review of the Retail Investment Strategy (RIS) which begins its second phase of legislative development in Brussels.
“Extending the tax regime for transfers to ETFs would do a lot to demonstrate that we want to encourage long-term investment by Spaniards, in general, not just the investment that is associated with higher income for marketers,” Buenaventura explained this Monday during his intervention at an event organized by the Spanish Institute of Analysts, FinReg 360 and BME.
In April, the European Parliament approved a series of amendments to the final text of the RIS that allowed retrocessions to be maintained in the distribution of financial products as long as it is not carried out through advice. The holding of elections in May delayed the final vote on the text until the first half of next year, which must first go through the European Commission again.
This brought some relief to the investment industry, but the text also proposed other important measures such as evaluate the suitability of the selected products based on their cost and the expected profitability in comparison to some indices, which is known as value for money.
The CNMV has always been in favor of applying greater transparency in the cost of funds, taking into account that, as Buenaventura stressed yesterday, Average fund fees in Europe are higher than those in the United Statesa country where investors are more accustomed to paying for advice.
More expensive European funds
“Active management burdens the participant, on average and comparing variable income funds, 1.3 points more annual fees than passive management through ETFs. But stock market ETFs consistently beat active funds on average by no less than two percentage points net of commissions,” said Buenaventura, citing a report carried out by Efama a year ago.
In this sense, for the president of the Spanish regulator, equating the tax transfer of investment funds and ETFs would allow opening the debate on retail investment beyond cost, considering “the need to encourage retail investment in financial assets” in Europe.
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