New Zealand's $82 billion managed funds industry, which includes KiwiSaver, has been given a C- report card by international research firm Morningstar.
New Zealand ranked second from the bottom in the 24-country report although its grade improved from the D- it was awarded in 2011, the last time the research was done.
Chris Douglas, co-head of research for Morningstar Australasia, said the grade was not a measure of the safety of the industry and people should not lose sleep over their investments.
"This is not a score on the fund management industry - we believe there are many high-quality funds in the New Zealand market."
Instead Douglas said the research was about comparing global best practice and showing how New Zealand's investor experience stacked up when it comes to regulation, tax, fees and disclosure.
Of the four categories measured by Morningstar, New Zealand received a B- for sales and media, a C for regulation/taxation and fees/expenses and a D for disclosure.
The report noted New Zealand had made strides in improving disclosure, but said the efforts have been uneven.
New periodic disclosure reporting for KiwiSaver schemes was due to be introduced by the Government in April but was put back to July to allow the industry more time to prepare.
The change will make it mandatory for providers to give standardised information about where the money is invested, the key people investing it, their fees and performance.
Douglas said the new regime for KiwiSaver would be a leap forward in disclosure for investors and he anticipated an improvement in New Zealand's score once it came in.
"But it is only on KiwiSaver. The regulator says they intend to roll it out across the industry but as to when or how it is yet to be shown."
KiwiSaver accounts for just $15.4 billion or less than 20 per cent of the industry by the value of total assets.
Douglas said New Zealand came out fairly well from a taxation point of view because it did not have a capital gains tax on investments and managed funds had a tax rate of 28 per cent compared with the top personal tax rate of 33 per cent.
But the report noted New Zealand's tax structure was complex on the surface.
"There are a number of taxable scenarios depending on the geography of the investment and the domicile of the fund manager an investor chooses," it stated.
Bruce Kerr, executive director of Workplace Savings - the industry body for superannuation funds - said reading the entire report showed the C- was not as bad as it sounded.
"I think if you look at the component parts three of the four areas have improved from the last report. I think what they are saying is New Zealand is on a journey."
He expected it to "hit a lot more buttons" in the next report.