Funds management analysis firm Morningstar has given New Zealand a D minus ranking in its latest Global Fund Investor Experience research report, which measures how attractive a country is for fund investors. It said New Zealand was the worst in the world. Here's the verdict verbatim.
New Zealand scored the worst overall, largely because of low grades for prospectuses and shareholders' reports and taxation. New Zealand received a grade of D- for prospectuses and shareholders' reports. This poor grade was given for several reasons, the most important of which was the lack of portfolio holdings disclosure. New Zealand also received a grade of D- in the area of taxation. Dividend and capital gains tax rates are high, and there is no tax incentive for long-term investing"”tax rates are the same for dividends, short-term capital gains, and long-term capital gains.
What I think The rating is deserved and should be a wake-up call for our funds management industry and those setting the rules for our capital markets.
It is one of the reasons why most regular New Zealand investors trust rental property and putting their money in a bank term deposit more than they trust putting their money in a managed fund. The controversy and pain around the closure of the 2 big ING toxic bond funds have emphasised just how unpopular fund managers have become. Somehow we have to do better or we are forever going to be hamstrung by the lack of functioning capital markets where growth company can raise money from regular investors so both can profit. The advent of KiwiSaver may help change this as our fund managers are given the scale to get costs down. But it is a gift from the gods for the fund managers. Let's hope they use it to improve their performance, reduce their costs and become more transparent. They have a long way to go. Your view?