Morningstar Australasia yesterday released its Global Fund Investor Experience Report, which assesses the experiences of managed funds investors in 24 countries around the world.
Australia was awarded a C+ rating, which places it firmly in the bottom third of the countries included in the report.
“Australia is the last country in this survey without any form of mandated, periodic portfolio holdings disclosure presently, or in proposed regulations,” said the report.
Given that global best practice is for mandatory quarterly disclosure, “Australia is very far from the mark”, according to Morningstar.
Australian investors are also subject to some of the highest levels of taxation in the world, according to the report.
“Australia is one of only a handful of countries in which capital gains are passed through to fund investors annually, rather than deferred and accumulated in the gains in the fund unit price,” said the report.
Fund investors in Australia also pay consumption taxes on the investment management service, according to Morningstar.
Product disclosure statements (PDSs) are extremely complicated in Australia as well, according to the report.
“Nowhere in the PDS is portfolio manager information available. The document also lacks standardised returns, and poorly describes investment strategy and risks,” Morningstar stated.
But it isn’t all bad. According to the report, Australia’s share, fixed income and multi-sector managed funds are “some of the least expensive globally”.
“Australia also fares well in the area of sales and media, benefiting from open architecture platforms and a variety of sales channels,” according to the report.
Additionally, the requirement upon financial advisers to place their clients’ interest above their own (contained in the Future of Financial Advice reforms) gives Australians stronger protection than is enjoyed by most investors around the world, said the report.
Investors in the United States are treated the most favourably, according to Morningstar (the US received an ‘A’ rating) – while investors in South Africa are subject to the worst treatment.
“The United States is one of only a handful of countries where fund investors are responsible for annual taxes on capital gains earned by funds,” according to the report.
