New Zealand is Worst Country for Mutual Fund Investors

March 15, 2011 New Zealand FinanceNew Zealand Taxation

Is time running out?A new study has reviewed New Zealand’s treatment of mutual funds, saying that the national tax system makes the country a poor choice for investors.

On March 11th the international investment research firm Morningstar released the results of a survey, which “measures the experiences of mutual fund investors in 22 countries in North America, Europe, Asia, and Africa.”

The survey examined 22 countries on the general criteria of “investor protection, transparency, fees, taxation, and investment distribution.” The results of the survey indicated that New Zealand performed the worst among all the countries examined. However, statements accompanying the survey conceded that the country has been making positive changes in the last two years and has the potential to greatly improve its ranks. Singapore, the US and Thailand were awarded the top three ranks respectively.

The study claimed that fees for New Zealand mutual funds are relatively low, but there is little standardization for fees across the industry, and examples of poor disclosure on the fee calculation process. It was reported that the area of sales and media of mutual funds was at an acceptable level in New Zealand, neither exceeding nor falling below international average levels. Regulation and taxation was considered to be very poor in New Zealand with the study’s authors noting that the country’s tax system gave absolutely no preference for investors to choose long term fund investment over property investment or short term deposits. Disclosure was judged as New Zealand’s worst area, with fund managers not being required to release a comprehensive fund portfolio holdings at regular intervals.

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