India more investor-friendly than China, says latest Morningstar survey

India outperforms China as an investor-friendly market with a mix of outstanding practices, says the latest Morningstar biannual Global Fund Investor Experience report.

The report assesses the experiences of mutual fund investors in 25 countries across North America, Europe, Asia, and Africa. It ranks South Korea as the best market for investors, followed by US, The Netherlands, Taiwan, UK and Sweden.

With an overall grade of C+, the Indian fund market stands out for the lack of any asset-based commissions. It also prohibits funds from charging performance fees, which is commendable and a typical among the countries in the survey. However, Indian funds still have average-to-expensive total expense ratios overall for equity and allocation funds. China received the lowest grade of a D+ because of high fees, limitations on overseas investing, and restrictions on foreign-domiciled funds.

"India requires disclosure of full fund portfolio holdings on monthly basis instead of on a semiannual basis. It is one of only two countries that hold this distinction.  Investment strategies and risks found in fund documents, however, are typically generic and provide little useful information," Morningstar said in a release on Tuesday.

 "The goal of our Global Fund Investor Experience report is to improve the investor experience by examining the treatment of mutual fund shareholders in various countries to spur dialogue about best practices," said Aditya Agarwal, managing director, Morningstar India.