Switzerland is Average for Fund Investors

Morningstar's fifth Global Fund Investor Experience (GFIE) study shows that Switzerland retains an overall grade of Average, with a number of improvements made since the last survey.

According to the GFIE-study, sales practices in Switzerland receive an Above Average grade, with more advisors looking at an investors’ entire financial situation rather than simply selling them a favoured fund. Although not a member of the European Union, Switzerland has been updating regulations to keep them in line with current and prospective European Union rules. However, some of Switzerland’s disclosure practices are subpar. For example, there is no clear information on whether managers or board members invest in the funds they run. The country also receives an Average grade for fees and expenses, because many investors use advisors on a fee-based model and stated loads are usually negotiable.

Morningstar has released its biennial GFIE-report, which grades the experiences of mutual fund investors in 25 countries across North America, Europe, Asia, and Africa. Morningstar researchers evaluated countries in four categories — regulation and taxation, disclosure, fees and expenses, and sales. The grading scale, updated from 2015’s 12-point letter grades, consists of Top, Above Average, Average, Below Average, and Bottom. Researchers identified the United States as the most investor-friendly market, while no country received a Bottom overall grade. More than half of the markets received an overall grade of Average, indicating widespread improvement in investor experiences across multiple markets driven by globalization, stronger regulation, and adoption of best-practice principles.

"The Global Fund Investor Experience report has driven dialogue about global best practices since the report was created in 2009 and continues to evolve in order to meet the needs of today’s investor experience," said Anthony Serhan, managing director of research strategy of the Asia Pacific and co-author of the study. "While regulations such as the U.S. Department of Labor Fiduciary Rule and Europe’s MiFID II approach implementation, other markets have already acted by enforcing bans on commissions, requiring or encouraging better disclosure from fund companies, and adopting technologies that can lead to lower costs for investors."