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By Jason Stipp and John Rekenthaler | 05-14-2013 02:00 PM

Grading the Fund Investor Experience

The U.S. gets an overall A in Morningstar's third Global Fund Investor Experience Report, but some things could be better for U.S. fundholders.

Jason Stipp: I'm Jason Stipp for Morningstar.

We just released our biennial Global Fund Investor Experience Report, which measures the experience of fund investors in 24 countries across the globe.

Here to offer some key takeaways from that study is our director of research John Rekenthaler. John, thanks for joining me.

John Rekenthaler: Sure, Jason.

Stipp: So this study is about the experience of mutual fund investors. It's not really about the mutual fund industry. So what does that distinction mean with respect to what you asked in the study and what the goal of the study was?

Rekenthaler: It is quite different. If we wanted to study the fund industry, for example, we would include Luxembourg, which is a massive market. The Luxembourg-based funds are the funds that are available for sale throughout Europe and much of Asia. We don't have Luxembourg [in this study] because this is about fund investors. There aren't many fund investors in Luxembourg.

Similarly, [if we were studying the fund industry,] we would have Cayman Islands or Ireland, other places that are offshore residency. So we are not scoring the fund industry. This isn't a consultant's report for the fund industry to look at and figure out what it should be doing better. It's about the investor experience.

So we're looking at which people are buying funds, and that means not only that you choose different countries, as I said--you choose countries like China and India and U.S. that have large markets and many investors, rather than Luxembourg--but you look at different factors. We are not looking just at what the fund industry does that affects investors, but there are other things, as well. There are the government tax practices, the regulatory environment, even things such as sales and media. So, we even score how the media--how newspapers, the Internet, and so forth--in that country report on funds. … There are certain things that they can be doing to encourage long-term investing and encourage lower-cost investing. And in some countries they do that and they help people. Other countries less so.

So, we are looking across the board at the investor experience. It's not a fund industry scorecard. It's an investor experience scorecard.

Stipp: Wrapping up those findings, what's the objective of the study? What do you hope that the study will bring to light or what kind of change are you hoping that this study might bring about?

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