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December 14, 2020 at 09:46 PM
The U.S. and India are the two most investor-friendly markets in terms of global best practices for the disclosure of portfolio manager names, fund ownership and compensation, according to the third chapter of Morningstar’s Global Investor Experience report, released Monday.
Related: How Did Advisor Portfolios Perform After COVID-19 Hit? Very Well, Says Invesco
The biannual report assesses the experiences of mutual fund investors in 26 markets across North America, Europe, Asia and Africa. The “Disclosure” chapter evaluates markets based on six key disclosure dimensions, including two new ones — sales disclosure, and ESG and stewardship disclosure.
The other dimensions: simplified and non-simplified prospectus, fee disclosure, portfolio holdings disclosure, and portfolio manager name and compensation disclosure.
Previous chapters in the study focused on fees and expenses, published in September 2019, and regulation and taxation, published in May.
Morningstar’s disclosure scorecard ranked the 26 markets as follows:
- Top: India, U.S.
- Above average: Canada, Korea, South Africa, Sweden, Taiwan, Thailand
- Average: China, Denmark, Finland, France, Germany, Hong Kong, Mexico, Netherlands, New Zealand, Norway, Spain, U.K.
- Below average: Belgium, Italy, Japan, Singapore, Switzerland
- Bottom: Australia
According to Morningstar, the U.S. has consistently led other countries in the disclosure area since the inception of the study.
For its part, India has gradually added global best practices to its disclosure framework, and has also set a high standard with monthly required portfolio holdings disclosure.
“Led by India and the U.S., most markets around the world have made gradual progress in their disclosure practices,” Christina West, director of manager research services at Morningstar, said in a statement.
Three markets improved their standing from the previous study: South Africa moved up to the above average group, and France and Netherlands joined the average group.
Singapore and Switzerland were downgraded to below average. Neither discloses named portfolio manager ownership in the fund, and neither provides a monetary illustration of fees in the simplified prospectus, according to Morningstar. Both have less frequent required disclosure of full portfolio holdings than the global best practice.
