Morningstar Studies Mutual Fund Investor Experiences Across 16 Countries, Gives the U.S. the Only 'A' and New Zealand a 'D-'
May 12 2009 - 10:04AM
PR Newswire (US)
CHICAGO, May 12 /PRNewswire-FirstCall/ -- Morningstar, Inc.
(NASDAQ: MORN), a leading provider of independent investment
research, today released results of a study that measures the
experiences of mutual fund investors in 16 countries in North
America, Europe, and Asia. Morningstar's evaluation of
investor-friendly practices in fund markets worldwide identified
the United States as the best market for fund investors based on
such criteria as investor protection, transparency, fees, taxation,
and investment choices. New Zealand scored the worst. Study results
were unveiled at the Morningstar UK Investment Conference in London
today. "Much has been written about the rights of common stock
shareholders from a global perspective. Policy differences among
countries have sparked a cottage industry of research and opinion
about corporate governance, and this debate is driving the gradual
convergence of rules and regulations among developed countries. But
the mutual fund shareholder doesn't even have a shack of global
corporate governance research, let alone a cottage," said John
Rekenthaler, vice president of research for Morningstar. "Five
years ago, Morningstar launched Stewardship Grades in the United
States that evaluate the degree to which fund companies put
investors first. These grades have been a catalyst for positive
change in the fund industry. We hope our global study will expand
the dialogue about best practices for the mutual fund investor to
investment companies, distributors, and regulatory bodies around
the world." Morningstar researchers evaluated and scored countries
in six categories-investor protection, prospectuses and
shareholders' reports, transparency in sales practices and the
media, fees and expenses, taxation, and distribution practices.
Both questions and answers were weighted to give greater importance
to high-priority issues, primarily questions surrounding fees and
transparency. Morningstar assigned a letter grade for each country
in the study commensurate with its score in each category. Then,
Morningstar added the category scores to produce an overall country
grade. The study's authors based their scores on a combination of
factual research and interviews with Morningstar analysts residing
in each country. Below are the overall country grades with the
countries listed in order from highest to lowest scores: United
States: A Switzerland: C+ China: B+ United Kingdom: C+ Taiwan: B
Singapore: C Japan: B Australia: C Netherlands: B Germany: C Italy:
B Hong Kong: C Canada: B- Spain: D France: C+ New Zealand: D- The
United States received an A in the areas of prospectuses and
shareholders' reports and for fees and expenses. U.S. mutual fund
reports provide a uniform presentation of fees and expenses as well
as complete disclosure of a fund's total expense ratio history. The
United States also had the lowest overall annual expense ratio for
its mutual funds. Most investors in the United States pay below
0.75% annually for fixed-income funds and below 1% for equity
funds. The United States scored less well in the area of investor
protection, garnering a C. The United States lost points because
there is no requirement that fund assets be kept with a custodian
that is separate from the fund manager. New Zealand scored the
worst overall, largely because of low grades for prospectuses and
shareholders' reports and taxation. New Zealand received a grade of
D- for prospectuses and shareholders' reports. This poor grade was
given for several reasons, the most important of which was the lack
of portfolio holdings disclosure. New Zealand also received a grade
of D- in the area of taxation. Dividend and capital gains tax rates
are high, and there is no tax incentive for long-term
investing--tax rates are the same for dividends, short-term capital
gains, and long-term capital gains. To read the complete report,
visit http://global.morningstar.com/GlobalInvestorExperience. About
Morningstar, Inc. Morningstar, Inc. is a leading provider of
independent investment research in North America, Europe,
Australia, and Asia. The company offers an extensive line of
Internet, software, and print-based products and services for
individuals, financial advisors, and institutions. Morningstar
provides data on more than 300,000 investment offerings, including
stocks, mutual funds, and similar vehicles, along with real-time
global market data on more than 4 million equities, indexes,
futures, options, commodities, and precious metals, in addition to
foreign exchange and Treasury markets. The company has operations
in 19 countries and minority ownership positions in companies based
in three other countries. (C)2009 Morningstar, Inc. All rights
reserved. Media Contacts: In the U.S.: Courtney Goethals Dobrow,
312-696-6241 or In the UK: Nadine Youssef, 312-206-6244 or
DATASOURCE: Morningstar, Inc. CONTACT: U.S., Courtney Goethals
Dobrow, +1-312-696-6241, , or UK, Nadine Youssef, +1-312-206-6244,
, both of Morningstar, Inc. Web Site: http://www.morningstar.com/
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