The United States and Singapore were co-valedictorians in a Morningstar report released Friday, with both countries earning an A on a report card that measured the overall experience of mutual fund investors based on a variety of factors, including taxation, transparency and investor protection.
At the other end of the spectrum, South Africa received a C-minus and New Zealand was at the back of the class with a D-minus.
The investment research firm evaluated 22 countries in four key categories: regulation and taxation, disclosure, fees and expenses, and sales and media.
Morningstar officials said the questions and answers were weighted to give greater importance to factual, empirical answers.
The U.S. mutual fund environment received an A for disclosure, fees and expenses, and sales and media. However, it was dinged with a sobering C-plus in the regulation and taxation category. Researchers cited government regulators' inability to identify violations like the Bernard Madoff Ponzi scheme and the fact that the United States is one of only five countries to tax investors on capital gains earned within fund shares. Also, U.S. tax rates for short-term capital gains are among the highest of the nearly two dozen countries studied.
