Mumbai: Strict disclosure norms, zero front loads, an array of schemes, a wide network of distributors, low entry amounts and widespread media coverage gets India a B rating in the second Morningstar Global Investor Experience study covering 22 countries. US, Singapore and Thailand are rated ahead of India.
On the flip side, the research finds that Indian investors pay double annual expenses (more than 2% in equity schemes) compared to lowest cost countries. It also states that the Indian fixed-income and money market funds are not cheap.
“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 to focus on and enhance best practices for investors.”
Singapore and United States rank A while Spain, South Africa, and New Zealand rank C, C- and D- respectively. The disclosure, fees and expenses, and sales and marketing in US is good for which it was ranked A, but it was ranked C+ in the area of regulation and taxation. The US government failed to thwart the Madoff Ponzi scheme. Additionally, US is one of only five countries to tax 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.
