Disclosure requirements and regulation of mutual fund costs are powerful tools for regulators.
Grant Kennaway, Morningstar Australasia Pty Ltd., and Christina West, Morningstar Research Services LLC
Feb 18, 2020
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Regulation is one of the key drivers of increasingly low mutual fund fees around the world, as identified in the Fees and Expenses chapter of Morningstar’s latest Global Investor Experience Study, or GIE. While other drivers of lower fees include investor awareness, competition, and the growth of passive products, regulation is the most powerful top-down driver that can lead to rapid and material investor benefits.
Regulators employ two main tactics to ensure that fees are competitive and proportionate to the value that investors derive. The most prevalent, which we explore below, are disclosure requirements and specifications around what and how mutual fund costs can be charged.
Morningstar research compares how regulation and taxation policies impact the investor experience across 26 markets.
Andy Pettit
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In the decade following the global financial crisis, investor protection-focused market regulation has generally continued to provide robust fund markets that help individuals invest safely for their future. Since the previous study in 2017, international policymakers have been shifting their focus onto environmental, social, and governance factors.
This trend was one of the top findings from the Regulation and Taxation chapter of the latest Global Investor Experience Study, which evaluates the environment for mutual fund investors in markets around the world. As shown below, the highest overall scores went to the Netherlands, Sweden, and the United Kingdom, while the lowest went to Australia, Canada, China, Japan, New Zealand, and the United States. None of the markets we evaluated yielded a bottom grade, as they all achieve basic protect