Fidelity, Federated, Schwab to post daily fund values
BOSTON (Reuters) - Fidelity Investments, Federated Investors Inc and Charles Schwab Corp on Friday joined a growing list of top U.S. money market fund managers in agreeing to post daily fund asset values, as the industry comes under growing pressure from regulators for more transparency.
Fidelity leads the $2.6 trillion market while Federated and Schwab are third-largest and fifth-largest, respectively.
Goldman Sachs Group Inc, JPMorgan Chase & Co and BlackRock Inc, which oversee $489 billion or 20 percent of U.S. money market funds, made similar moves earlier this week.
The companies said the new disclosures will show investors that money funds are stable because the share values only vary by miniscule amounts from day to day. The new disclosures could also head off calls from regulators for more costly and potentially disruptive reforms.
Investors buy and sell money market shares at a fixed price of $1 even though the actual net asset value, or NAV, per share may vary by a few hundredths of a percent. Currently, fund companies only disclose those fluctuations on a monthly basis and even then after a 60-day lag.
Investors' lack of information about the value and quality of fund assets helped create a wave of panicked withdrawals from money funds after Lehman Brothers went bankrupt in 2008. Regulators say such a panic could recur unless more changes are made, such as ending the fixed $1 per share price policy and moving to floating share prices, like all other mutual funds.
The more frequent disclosures could be aimed at showing regulators there are hardly any fluctuations away from $1 in practice, so no further rules as needed, said Lance Pan, director of investment research at Capital Advisors Group.
Alternatively, Pan said, some companies may be trying to calm customer fears if regulators force them to adopt the floating NAV. "They may want to use this to gauge public response before committing to the floating NAV concept," he said.
Fidelity and Federated have been among the most vocal opponents to proposed new regulations. Unlike large banks, the two fund firms do not have nearly as much customer money invested in alternatives like certificates of deposit or checking accounts.
Boston-based Fidelity said it will begin the daily disclosures on January 16. Fidelity has about $430 billion in money market fund assets under management.
"Providing more frequent disclosure of these minute changes will help investors better understand how vigilant we are in keeping our money market mutual funds safe," Nancy Prior, Fidelity's president of Money Markets, said in a statement.
Federated will start publishing the prior day's daily market NAV for five of its largest prime money market funds during the week of January 21, spokeswoman Meghan McAndrew said. The company might publish daily data for other funds if clients demand it.
"From a competitive standpoint, we believed it was necessary to provide the information," she said. "In the process we make an already transparent investment product even more transparent."
Asked whether the company might be laying the groundwork for more regulatory changes, McAndrew said Federated remains "ardently opposed to a floating NAV."
Schwab said late on Friday it will start posting daily per-share market values for money funds later this quarter.
Marie Chandoha, president of Charles Schwab Investment Management, said in a statement that the company's decision was "not prompted by a significant number of requests" from clients. Rather, she noted, "more frequent reporting can serve as an indicator of the stability of our money market products for investors looking for near real-time information."