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Canada receives below average rating in global survey of fund costs

By Kate McCaffery | September 18 2019 09:30AM

Chicago-based Morningstar Inc. published the first chapter of its biennial Global Investor Experience (GIE) report this week, which grades the experiences of mutual fund investors in 26 markets across North America, Europe, Asia and Africa. The first chapter, entitled Fees and Expenses, evaluates the costs that mutual fund investors incur across global markets.

The report gave top grades to Australia, the Netherlands and the United States, calling those countries the most investors-friendly markets. “This is the third study in a row that these three countries have nabbed the highest grade in this area,” say the report’s authors. “What these markets have in common is ongoing fund fees that are typically unbundled.”

Canada below average rating

The ratings firm assigned bottom grades to Italy and Taiwan, fund markets which are characterized by high fees and expenses. Although Canada improved since the report was last published in 2017, it still came in just above the bottom countries, with a below-average rating overall. Half of the markets surveyed received an average or above average grade.

Across the board, the report found that asset-weighted median expense ratios fell in most of the markets surveyed since the 2017 study. The Netherlands saw the highest decline, followed by India and Canada.

“The fees and expenses grade for Canada improves to below average in this study, reflecting the increased availability and uptake of retrocession-free share classes,” they write. “The grade remains held back by asset-weighted medians that are at times the highest of all markets in this study.”

Morningstar first launched the GIE study in 2009, “to encourage a dialogue about global best practices for mutual funds from the perspective of fund shareholders.” The firm’s next chapter, Regulation and Taxation will be published before the end of the year, with the remaining two chapters about disclosure and sales to be published in 2020.

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