US Fund Industry Gets an A
The grades are in. They may be controversial, but the grades are in. Morningstar completed a study of mutual funds in 16 countries. The United States was the only country to receive an A.
The US scored high in several categories including transparency (due to prospectuses) and fees. These two areas have been hot button issues as many US investors have complained about high fees and lack of transparency for years. So, does the fund industry really deserve an A. Apparently, Morningstar is grading on relative terms -- comparing mutual fund practices in various countries versus comparing each country on standalone terms.
This report is sure to raise the eyebrows of mutual fund critics and investor advocates. The fund industry, the SEC and other investor organizations, should not become complacent. We should not be satisfied with the high grade. It’s positive for the US fund industry to receive high marks, but they have a long way to go.
Sales practices (contests rewarding advisors for selling particular funds promoting self-interest), fee disclosures (trading costs within the fund are not disclosed or included in the expense ratio) and taxation are a few areas that need to be addressed before the US mutual fund industry gets an absolute A in my book. Let me know how you grade the fund industry by voting in the poll.
Comments
I voted “C” in the poll – like most others I have lost half of the value of my fund holdings. If these so-called experts can’t do any better, why should they get a better grade? Just because the competition does abysmally doesn’t mean US funds are doing well.
Thanks for the comment. I understand the performance issues. I would look forward to seeing research from Morningstar based on US managed funds versus internationally managed funds. They didn’t touch performance issues in the study.
I GRADED THEM A C – I TOOK ALL MY MONEY OUT OF THE MUTUAL FUND, PUT IT IN A MONEY MARKET AND HAVE PLAYED THE STOCK MARKET FOR THE PAST 12 MONTHS. I HAVE DONE BETTER THAN IF I HAD LEFT THEM IN THE FUNDS AND I AM NO EXPERT. WHATS NICE IS THAT ALL PROCEEDS FROM SALE OF STOCKS GOES RIGHT BACK INTO THE MONEY MARKET AND I PAY NO CAPITOL GAINS. I DOUBT THAT I WILL EVER PUT MY MONEY BACK IN THE HANDS OF A FUND MANAGER.