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UPDATE 1-EU watchdogs to study cost, performance of mutual funds

(Adds more detail, Dombrovskis)

PARIS, Oct 17 (Reuters) - European Union financial watchdogs will conduct a large-scale study into the cost and performance of mutual funds, a top regulator said on Tuesday.

Steven Maijoor, chair of the European Securities and Markets Authority (ESMA), told a conference in Paris that regulators would look at both passive and active funds.

Passive investing, where funds typically charge the cheapest fees for tracking a stock index, has grown enormously.

Active funds charge more for their services, but some have been accused by critics of being "closet" trackers, meaning they track an index by stealth rather than - as they advertise - using their expertise to pick investments.

Regulators in Europe have become more focused on fees charged by investment funds in order to encourage people to invest more in their own retirement, rather than relying on the state.

Maijoor said ESMA and the European Banking Authority would assess the reporting of costs and past performance of retail investment products, in order to "increase investors awareness of the net return of these products, and the impact of fees and charges."

The regulators will obtain more data on costs and charges under new EU securities rules known as MiFID II that come into force in January, Maijoor said.

Valdis Dombrovskis, vice president of the EU's executive European Commission, told the conference that Brussels would publish proposals to remove obstacles to the cross-border sales of funds regulated under EU law.

"This would ... broaden the offer of fund products across the EU," Dombrovskis said. (Reporting by Huw Jones; Editing by Maya Nikolaeva and Mark Potter)