In early July, the European Securities and Markets Authority (ESMA) published an Economic Report discussing the sale of complex financial products, including UCITs focused on alternative investment strategies and structured products, to retail investors. The report analyzes whether unexpected losses in relation to these products could reasonably be expected to lead to complaints, reputational damage, or a loss of confidence in the integrity of the financial markets.

The report recommends that, given the complexity of certain products, disclosures be improved to include a higher degree of transparency regarding the total costs, including embedded costs, and more detailed information regarding specific product risks, with quantification. The study provides useful survey information on market trends, including market size, growth, and type of product offered. The study assesses the intrinsic value of a sampling of structured products using various pricing models. The study also analyzes the returns on a sampling of nearly 3,000 principal-protected structured products.