CHICAGO, March 11, 2011 /PRNewswire/ -- Morningstar, Inc.
(Nasdaq: MORN), a leading provider of independent investment
research, today released results of its second study that measures
the experiences of mutual fund investors in 22 countries in
North America, Europe, Asia,
and Africa. Morningstar's
evaluation of investor-friendly practices in fund markets worldwide
identified the United States and
Singapore as the best markets for
fund investors based on such criteria as investor protection,
transparency, fees, taxation, and investment distribution.
New Zealand scored the worst, but
has been showing signs of improvement since Morningstar published
its first study in May 2009. This
year's study also includes first-time evaluations of fund investor
experiences in Belgium,
India, Norway, South
Africa, Sweden, and
Thailand.
"With this report we hope to advance the dialogue about best
practices from the perspective of the mutual-fund shareholder,"
said John Rekenthaler, vice
president of research for Morningstar. "Just as with stocks, some
jurisdictions offer relatively friendly investment climates for
mutual fund owners and others less so. Working with our analysts
around the world we have analyzed and compared 22 mutual fund
marketplaces, highlighting their strengths and weaknesses. We hope
our global study will help investment companies, distributors, and
regulatory bodies worldwide continue to focus on and enhance best
practices for investors."
Morningstar researchers evaluated countries in four categories:
Regulation and Taxation, Disclosure, Fees and Expenses, and Sales
and Media. Both questions and answers were weighted to give greater
importance to factual, empirical answers as well as the
high-priority issues of fees, taxes, and transparency. Morningstar
assigned countries a letter grade for each category and then added
the category scores to produce an overall country grade. The
study's authors gathered information from available public data and
from interviews with local Morningstar analysts. Below are the
overall country grades, from highest to lowest scores in
alphabetical order:
Singapore: A
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Germany: C+
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United States:
A
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Japan: C+
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Thailand: A-
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United Kingdom:
C+
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India: B
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Australia: C
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Netherlands: B
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Belgium: C
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Switzerland: B
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Hong Kong: C
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Taiwan: B
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Italy: C
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China: B-
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Norway: C
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Sweden: B-
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Spain: C
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Canada: C+
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South Africa:
C-
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France: C+
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New Zealand: D-
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The United States received an A
in the areas of disclosure, fees and expenses, and sales and
marketing, but a C+ in the area of regulation and taxation. U.S.
Government bodies assigned with investor protection have struggled
to identify violations in a timely manner, such as the Madoff ponzi
scheme. Additionally, the United
States is one of only five countries to tax fund investors
on capital gains earned within fund shares, and its tax rates for
short-term capital gains are among the highest in this study.
Singapore received A's for
regulation and taxation as well as for sales and media. The country
has a strong regulatory regime with an absence of most investment
taxes. Regulations ban sales practices that are most rife for
abuse, and disclosure is good. However, Singaporean funds could
carry lower costs.
New Zealand scored the worst
overall, largely because of low grades in the areas of Disclosure
as well as Regulation and Taxation. While the tax structure
continues to be relatively unfavorable to fund investors in
New Zealand, it is worth noting
that there may be changes on the horizon in terms of disclosure and
regulation. The Securities Commission and the Ministry of Economic
Development have recently begun reviewing the uniformity of
disclosure of fees, commission structures, advisor incentives, and
other regulatory changes. In late May
2010, the New Zealand Commerce Minister also announced the
establishment of a single regulator, the Financial Markets
Authority (FMA), ahead the first full review of the Securities Act
in more than 30 years.
Of the new countries reviewed in this year's study, Thailand had the highest overall score of A-.
Strong disclosure and low fund fees boosted Thailand's score. However, limited fund
availability, sales contests, and poor media coverage tempered the
rating. South Africa scored at the
bottom of the new countries evaluated with a C-. Regulation that
limits foreign investment reduces the availability of
foreign-domiciled funds and constricts the number of investment
strategies that managers based in South
Africa can undertake. South
Africa also scored poorly for disclosure. Historical expense
ratio information, detailed fees, trading costs, and portfolio
holdings were generally lacking or difficult to obtain.
To read Morningstar's complete Global Investor Experience Study,
visit
http://global.morningstar.com/GlobalInvestorExperience2011.
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 approximately 380,000 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 26 countries.
©2011 Morningstar, Inc. All rights reserved.
MORN-R
Media Contacts:
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Alexa Auerbach, 312-696-6481
or alexa.auerbach@morningstar.com
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SOURCE Morningstar, Inc.