HONG KONG, May 27, 2013 /PRNewswire/ -- Morningstar Asia Limited, a subsidiary of independent investment research firm Morningstar, Inc. (NASDAQ: MORN), today released its Global Fund Investor Experience report, which assesses the experiences of mutual fund investors in 24 countries/regions across North America, Europe, Asia, and Africa. Hong Kong earned a C- in the 2013 report.
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Morningstar's evaluation of investor-friendly practices in fund markets worldwide identified the United States as the best market for fund investors based on criteria such as investor protection, transparency, fees, taxation, and investment distribution, while South Africa scored the worst. This year's report also includes first-time reviews of fund investor experiences in South Korea and Denmark.
"We launched the first Global Fund Investor Experience report in 2009 to examine the treatment of mutual fund shareholders in 16 countries with the goal of advancing a dialogue about best practices worldwide. Since that time we've had numerous conversations with regulators and investment companies in multiple countries about their existing policies and ways to improve," said Grant Kennaway, head of fund research, Asia Pacific for Morningstar. "Working with our analysts around the world, we expanded our survey to 24 countries this year. We hope our survey findings will help investment companies, distributors, and regulatory bodies around the globe continue to focus on improving the environment for investors."
Morningstar researchers evaluated countries/regions in four categories: Regulation and Taxation, Disclosure, Fees and Expenses, and Sales and Media. Morningstar weighted the questions and answers to give greater importance to factual, empirical answers as well as the high-priority issues of fees, taxes, and transparency. Morningstar assigned countries/regions a letter grade for each category and then added the category scores to produce an overall country/region grade. The report's authors gathered information from available public data and from Morningstar analysts. Below are the overall country/region grades, from highest to lowest scores and then in alphabetical order:
United States: A Sweden: B-
South Korea: B+ Switzerland: B-
Netherlands: B United Kingdom: B-
Singapore: B Australia: C+
Taiwan: B Belgium: C+
Thailand: B Canada: C+
Mainland China: B- France: C+
Denmark: B- Italy: C+
Germany: B- Japan: C
India: B- Hong Kong: C-
Norway: B- New Zealand: C-
Spain: B- South Africa: D
Hong Kong
Hong Kong scored a C-, which reflects above-average investment costs and poor disclosure practices. The absence of virtually any taxes on fund investments somewhat offsets these weaknesses.
-- Regulation & Taxation: This is Hong Kong's strongest area, receiving a grade of B+. Hong Kong's virtually nonexistent taxes on fund investments greatly contribute to the above-average grade in this section.
-- Disclosure: Hong Kong's Disclosure requirements do not approach industry averages, let alone global best practice, earning Hong Kong a D- in this area.
-- Fees & Expenses: Hong Kong receives a C in Fees & Expenses. This is not surprising, given that the price of funds available for sale in Hong Kong, as measured by total expense ratios, is higher than in many countries.
-- Sales & Media: When it comes to Sales & Media, Hong Kong lacks regulations around advisor guidance and sales contests.
Among the key findings of the study:
-- Bans on advisor commissions are spreading around the world. In the coming months, Australia and the UK will restrict commissions with more regulations in the pipeline.
-- While the U.S. and European fund markets are roughly similar in size, U.S. investors pay significantly lower fees than European investors.
-- New Zealand showed the largest improvement from the 2011 study rising to a C- from a D- because of positive regulatory changes and an encouraging expansion of disclosure requirements.
-- Fund companies in most countries continue to treat the names of portfolio managers as trade secrets, leaving investors no way to determine who is responsible for a fund's success or failure.
-- Australia and New Zealand do not require funds to publicly disclose full portfolio holdings, while France, South Africa, South Korea, and the UK only disclose holdings to current owners.
To read Morningstar's complete Global Investor Experience report, visit: http://global.morningstar.com/fundinvestorexperience2013
About Morningstar Asia and Morningstar, Inc.
Morningstar Asia Limited is a subsidiary of Morningstar, Inc., a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 416,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 9 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its registered investment advisor subsidiaries and has approximately U.S.$149 billion in assets under advisement and management as of Dec. 31, 2012. The company has operations in 27 countries.
Morningstar expanded to Asia in April 2000 and has grown its businesses into Japan, South Korea, India, mainland China, Taiwan, Singapore, Malaysia, and Hong Kong. The Asia operations not only offer timely information on mutual funds, but also insightful and independent analyses, unbiased fund ratings, and sophisticated analytical tools to help both individual and professional investors make better investment decisions.
Media Contact:
Cecilica Chung, +852-2973-4655 or cecilica.chung@morningstar.com
Source Morningstar Asia