THE DEVELOPMENT OF INVESTMENT FUNDS FOR RETAIL INVESTORS: A COMPARATIVE ANALYSIS OF UKRAINE AND THE EUROPEAN UNION

Abstract

This article examines current trends in the development of investment
funds aimed at private individuals - retail investors - in Ukraine and the European Union. The
relevance of this research stems from the need to increase the role of household savings in the
formation of investment capital, to expand opportunities for the public to participate in capital
markets, and to further adapt the Ukrainian model of collective investment to European principles
of regulation, information transparency and investor protection. It is argued that comparing the
Ukrainian and European markets solely on the basis of the number of investment funds or total
assets under management does not allow for a full assessment of the level of development of the
retail investment segment, as the Ukrainian market is characterised by the significant dominance of
venture capital collective investment institutions, whilst the participation of individuals is
concentrated primarily in certain open-ended and public investment funds.
The aim of the study is to provide a theoretical justification of the functional and economic
nature of a retail investment fund, to identify the factors determining its accessibility to nonprofessional investors, to highlight structural differences in the development of this segment in
Ukraine and the European Union, and to propose directions for improving the Ukrainian collective
investment market.
The methodological framework of the study comprises systemic, institutional, structural and
comparative approaches, as well as an analysis of regulatory and analytical materials from
Ukraine and the European Union. For empirical testing, a sample of Ukrainian and European
investment funds has been compiled, representing various investment strategies and asset classes. The authors propose their own interpretation of the concept of a ‘retail investment fund’ as a
functional and economic category characterising a collective investment fund from the perspective
of its actual focus on individuals - non-professional investors. Unlike approaches based primarily
on the organisational and legal form or the regulatory classification of funds, the proposed
interpretation takes into account the conditions for acquiring, holding and terminating an
investment, the availability of information, the level of liquidity and the mechanisms for protecting
investors’ rights.
The multi-faceted nature of investment fund accessibility has been substantiated, and its
financial, organisational and transactional, digital, informational, liquidity and regulatory and
protective components have been identified. A comparative analysis has shown that certain
Ukrainian investment products may be characterised by a low financial entry threshold and a high
level of digitalisation, whilst the advantages of the European model are most clearly evident in a
broader range of investment products, standardised disclosure of information, transparency of
costs, the development of mechanisms for assessing a product’s suitability for an investor’s needs,
and a systematic approach to regulatory protection.
To summarise the findings, a two-vector model for positioning investment funds along the
‘functional accessibility - investment attractiveness’ axis has been proposed. The model makes it
possible to assess separately how easy it is for a retail investor to gain access to an investment
product, and how attractive it is in terms of its economic characteristics. Within the model, four
typical zones are identified: products that are both highly accessible and attractive; accessible but
less attractive products; potentially attractive products with significant barriers to entry; and
products with low values for both characteristics. The practical significance of the proposed
approach lies in its potential for use in the comparative analysis of various collective investment
models and for justifying the directions of development for the Ukrainian investment fund market
for retail investors.
Keywords: investment funds, retail investor, retail investment fund, collective investment
schemes, collective investment, functional accessibility, investment attractiveness, investor
protection, capital market, European integration.

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