U.S. Comes out on Top in Analysis of Investor Experience

March 11, 2011 (PLANSPONSOR.com) – A Morningstar 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.

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, according to a press release. Morningstar explained that 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 the 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, the press release said. 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 (D-), largely because of low grades in the areas of Disclosure as well as Regulation and Taxation.   

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-.  

The complete report, including the overall grades of the 22 countries evaluated, is here.