Active funds that invest in shares have a slightly higher gross performance than their passive investment counterparts, according to the European Securities and Markets Authority’s (ESMA) first annual report on cost and performance of retail investment products. However, the paper points out, that outperformance disappears as soon as the fees of actively managed funds are factored in. Actively managed equity funds provide a slightly better gross performance than passively managed funds, even though the margin is small. Using a sample of 2.4 trillion euro open-ended fund universe at the end of 2017, the paper shows that gross returns for active funds over both a one year and three year period were around 1% higher for active funds compared to passive. However, that outperformance is flattened once the average active fund fee of 1% is included. In contrast, passive funds were found to have an average fee of 0.6%. Over a longer time horizon, performance for active funds begins to slip below those of passive funds.