India Attains a Very good grade in the Global Investor Study conducted by Morning Star

It’s really proud to say that India has been ranked B in the Morning Star Global Funds Investor Experience Study

India has scored a B Rank which is considered a High grade for an Emerging market.

The Study measures the experience of mutual fund investors in 22 countries in North America, Europe, Asia and Africa. The Study also analyses and compares mutual fund market places, highlighting their strengths and weaknesses. The global study is intended to help investment companies, distributors and regulatory bodies worldwide to continue focus on and enhance best practices for investors.

The Research evaluated countries in four categories: Regulation and taxation, Disclosure, Fees and Expenses, and Sales & Media

Below are the country grades, from highest to lowest scores in alphabetical order.

Singapore   A

United States A

Thailand  A-

India B

Netherlands B

Taiwan B

China B-

Sweden B-

Canada C+

France C+

Germany C+

Japan C+

UK C+

Australia C

Belgium C

Hong Kong C

Italy C

Norway C

Spain C

South Africa C-

New Zealand D-

Singapore and United States were identified as the best markets on the criteria as investor protection, transparency, fees, taxation and investor distribution.

New Zealand scored the worst.

The main points noted by the survey on India are as below:

1. India is not afraid to be different – being the only country in the survey to have banned fund’s front end load charges           
2. India has an excellent Disclosure and is one of only two countries where portfolios are typically disclosed monthly.
3. Sales and Media practices are also good. Indian investors enjoy an open sales system, as the vast majority of fund distributors offer the choice of multiple fund providers. Low investment minimums make Indian funds widely accessible to middle-income buyers. For its part, the media does well in reporting on a daily basis about mutual funds.
4. India’s main drawback is high fund expenses. India is one of only four countries in this survey with equity-fund annual expenses that exceed 2%, meaning that Indian investors pay double what those in the lowest-cost countries are charged. Indian fixed-income and money-market funds are not cheaper.
5. Indian Regulation is a mixed bag. Indian investors face capital controls that limit their ability to invest in foreign securities. On the other hand, India has been actively modernizing its fund laws, and the regulator is proactive in identifying violators of securities laws.

The Study gives a very good impression of the Indian Mutual Fund Industry which is in a transition phase and needs to do a lot ahead.

The above study gives me the confidence that foreign investors will start investment in India in a big way, once the norms for the same are finalised.