Mutual funds find Indian market more investor friendly than China’s although some of its practices are not at par with global standards, says a Morningstar report.
According to the Fund Investor Experience Report, of 25 countries, Korea and the US were named as the most investor- friendly markets while China was the least investor-friendly.
“With an overall grade of C+, India has a mix of outstanding practices and others that fail to meet global standards, relative to other markets evaluated in this report,” Morningstar, a provider of independent investment research said adding that the Indian fund market lacks any asset-based commissions.
From ‘A’ to ‘D+’, there are nine grades in the report.
Morningstar evaluated countries in four categories that are weighted to calculate the overall grade: Regulation and Taxation, Disclosure, Fees and Expenses, and Sales and Media.
In the Regulation and Taxation category, India receives a B- grade.
“India is one of only a few countries in the report that continues to have capital controls, which limits investors’ ability to invest in foreign securities,” the report said.
In the Disclosure category, India received a C+ grade.
India requires disclosure of full fund portfolio holdings monthly instead of on a semiannual basis typical of other markets evaluated in the report. India is one of only two countries that hold this distinction, the report said.
Korea received an A this year because of its improved sales practices, while the United States garnered the highest score for the fourth time.
The Netherlands and Taiwan got an A- grade, while United Kingdom got B+ and Sweden received B.
The countries that received B- ranking include Australia, Denmark, Finland, Norway and Switzerland.
India along with Canada, Germany, New Zealand and Thailand got a C+ rank, while Belgium, France, Hong Kong, Singapore, South Africa and Spain got C.
“China received the lowest grade of a D+ because of high fees, limitations on overseas investing, and restrictions on foreign-domiciled funds,” the report said.