Changes around fees and best interest duties for intermediaries have benefitted the Australian managed funds market but it still lags other parts of the world in the areas of disclosure and regulations.
As a result Australian ranks seventh out of 25 nations in terms of the experiences of managed fund investors according to a report released today by Morningstar.
In its biennial Global Fund Investor Experience report Morningstar examined the experiences of managed fund investors in the areas of regulation and taxation, disclosure, fees and expenses, and sales and media. Based on Australia’s good position in the areas of fees and expenses and sales and media but its poor position in the areas of taxation and disclosure issued a grade of B -, behind Sweden, the UK, Taiwan, the Netherlands, the USA and Korea.
Morningstar stated Australia received an A grade for fees and expenses driven by the removal of sales commissions which had reduced entry and ongoing fund fees with the report stating equity, fixed income, and multi-sector funds in Australia are some of the least expensive globally.
The Australian market scored an A- in the area of sales and media as a result of multiple channels being available to access managed funds and an open-architecture industry.
The report stated that investors benefitted from the best interests duties of advisers which was a stronger protection than those found in other markets globally.
However for disclosure and regulation and taxation Morningstar issued a D grade in both categories stating Australia was the only country in the report that does not have any working periodic mandatory portfolio holdings disclosure and does not require the publication of portfolio managers’ names and tenures in product disclosure statements.
The report also stated Australian investors paid the highest fund taxes of any country in the report and was one of a few countries in which fund investors have to pay capital gains each year. At the same time not having a single regulatory body for managed funds and retirement vehicles increased costs and the amount of information fund managers had to receive.
