The Australian managed funds industry trailed behind its North American and some European counterparts in terms of transparency of prospectuses, investors' reports, fees and expenses, according to a report by global research house Morningstar.
The local industry scored a 'C' and was ranked equal 11th in a survey of 16.
Transparency in prospectuses/investors' reports was the main area where Australian managers did not stack up, the study said.
The Australian and New Zealand funds industries were the only ones in the world which do not require full portfolio holdings disclosure on a regular basis.
The local sector also did poorly in areas of investor protection and taxation.
However, Australian fixed income and share fund expense ratios were lower than those of other countries - but expense ratios for cash funds were at the higher end of the spectrum.
US managers ranked the best with an 'A' grade. US mutual fund reports provided a uniform presentation of fees and expenses as well as complete disclosure of a fund's total expense ratio history.
Most investors in the US pay below 0.75 per cent annually for fixed income funds and below 1 per cent for stock funds.
Countries including China, Canada, Japan and the Netherlands fared better than Australia while Germany, Hong Kong and Spain fared worse. New Zealand was the lowest, ranked at 'D-'.
Australian managers were stuck between a rock and a hard place, Tyndall/Suncorp Investment Management head of bonds Roger Bridges said.
"If I tell everybody what my portfolio looks like then therefore the information can get out to other people like my competitors and that becomes an issue," he said.
"We basically have to balance transparency to investors and protecting our proprietary information. I wouldn't have thought we would be worse than overseas managers."
