When it comes to fees and expenses, the U.S., along with Australia and The Netherlands, have received the “Top” grade from Morningstar in the firm’s sixth Global Investor Experience report.

Labeling these three countries the most-investor friendly markets, Morningstar said in its report that the U.S. received the top grade “driven largely by low asset-weighted median expenses across asset classes,” from 0.42% for fixed income funds to 0.59% for equity funds and 0.60% for allocation funds.

Those low ratios translated to top rankings for the U.S. among the 26 markets included in the study when considering available-for-sale funds, according to Morningstar. The U.S. also “benefits from the mostly organic growth of its fee-based advice market and the broad availability of no-load, no-trailer share classes for do-it-yourself investors,” the report said.

In the U.S., front loads and trailing commissions remain “relevant” and aren’t directly influenced by the SEC, according to Morningstar. But “market forces have driven investment away from share classes that employ those traditional fee arrangements,” the report said, adding: “When investors work with a commission-based sales agent, loads and breakpoints are stated and non-negotiable, but load waivers based on cumulative investment are common.”

Of retail share classes, 29% still reported a front load but, per Morningstar’s U.S. Fund Fee Study published in April, these share classes have been in “aggregate outflows for the last five years and are becoming less relevant,” it said.

In recent years, investors have been migrating to fee-based advisors and “advisors themselves have been reconsidering such transaction-based models,” according to Morningstar. Currently, fee-based arrangements make up most of the retail fund assets in the U.S., the report said. It’s also “common for investors to forgo advice entirely and invest directly in funds without loads or commissions,” it noted, adding: “So-called ‘no-load’ funds are widely available and represent a significant portion” of investor assets now.

Similarly, investors can also opt to buy domestically listed exchange-traded funds that the report pointed out “lack the minimum investment requirements of open-end funds and feature prominently in digital advice solutions such as robo-advisors.”

ETFs are “accessible and highly utilized” in the U.S. market through fee-based and self-directed investing, Morningstar said. Although ETFs are often associated with passive management, some U.S. ETFs instead use active management, “further eroding the distinction between” open-end funds and ETFs in the market, the report noted, adding ETFs in the U.S. “tend to be more tax-efficient than open-end vehicles owing to their more regular use of in-kind redemptions.”

Although “hundreds of asset managers operate” in the U.S., Morningstar singled out Vanguard for its influence on the fee landscape. “Offering predominantly passive strategies and operating at enormous scale in a mutual ownership structure, the firm routinely offers investments at prices well below the norm,” the report said, adding: “The asset-weighted average expense ratio across the firm’s open-end and exchange-traded funds together” was only 0.09% as of Dec. 31. Fee competition in the U.S. has “further benefited fund investors, as other large asset managers have matched or undercut Vanguard’s pricing of certain core strategies,” according to the report.

Fidelity, meanwhile, is attracting investors to its platform with new “ZERO” branded open-end index funds that actually charge 0% in ongoing expenses, the report went on to say. But the “broader trend toward creating mutual fund ‘clean shares’ that include only management expenses has lost significant momentum” since the Labor Department’s efforts to introduce a fiduciary rule in 2017 “fizzled out,” the report said.

The U.S. was one of the few markets in the survey to require that any performance fees paid to fund advisors include a symmetrical reduction in fees for underperformance, also known as fulcrum fees, Morningstar noted. “In practice, though, few funds” in the U.S. assess performance fees, it said, concluding: “Where such fees do exist, the terms are disclosed in the financial documents, though these can be complex.”

Scoring worst in the report were Italy and Taiwan, which each received a grade of “Bottom” for high fees and expenses.

Since Morningstar’s last Global Investor Experience study in 2017, “we’ve seen fund fees continue to decline across global markets,” according to Grant Kennaway, the firm’s global practice leader of manager research and the 2019 report’s co-author. “This reflects a number of key trends including orderly competition, regulatory intervention, and changing practices that have led to the unbundling of advice and sales fees from fund expense ratios in some markets.”

Chapters of the report to be released in the future will cover regulation and taxation, disclosure and sales.