EU policy makers and member states have agreed a deal on pay of the fund managers which curbs their pay similar to new rules for bankers.
As per the new rules, fund managers have to take half of any bonus payments in units of their own funds.
The new rules are set to become law in 2016, also stipulates that fund managers must defer 40% of any bonuses for at least three years, or 60% if bonuses are particularly high.
"We want to ensure that responsible remuneration policies are in place across the financial sector and that there are no loopholes for risky and dangerous trading practices," Reuters quoted lawmaker Arlene McCarthy, as saying.
The rule change will encompass mutual funds operating in the bloc, but not affect hedge funds or private equity investors, governed by different law.
The EU has also introduced protections for whistleblowers and given regulators the scope to levy hefty fines on companies which break the rules.
Any fund found guilty of breaching the rules will face penalty of up to 10% of turnover.