New Zealand has been downgraded to average when it comes to being an investor-friendly market in terms of fees and expenses.
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The Fees and Expenses chapter of financial research firm Morningstar's latest biannual Global Investor Experience (GIE) report has marked New Zealand down to average from above average in the previous 2019 report, which looks at managed funds in 26 countries across North America, Europe, Asia, and Africa.
"New Zealand has once again generated a satisfactory outcome but in a global environment of shrinking fees, the industry risks falling behind global peers, given the improvements in fees and expenses that other markets are making," Morningstar data director Greg Bunkall said.
"A shift towards passive investments, including ETFs (exchange traded funds), that lower the fee burden are more pronounced in other markets where ETF take up in stronger," Bunkall added.
"New Zealand also lags global best practice for its lack of transaction fee reporting for managed funds," he said.
"We also note New Zealand regulations continue to allow managed funds to charge asymmetric performance fees, based on what in our view can be inappropriate benchmarks, given they are not always tied to the underlying asset allocation of the fund."