* Goldman Sachs, JPMorgan, BlackRock move to reassure
* Vanguard plans no changes
* Industry faces potential new rules following financial
By Ross Kerber and Aaron Pressman
Jan 9 Three of the biggest managers of U.S.
money market funds said on Wednesday they will start disclosing
fund values each day rather than monthly, a move that could
boost investor confidence and blunt new regulations.
Goldman Sachs Group Inc, JPMorgan Chase & Co
and BlackRock Inc, which together oversee $489 billion
of money market funds, or almost 20 percent of the industry, all
said they wanted to give investors a clearer picture of the
quality of their funds' holdings.
The moves come as the entire industry has been groping for
the right strategy to avoid more drastic rules regulators are
considering to beef up money funds, which suffered a wave of
panicked withdrawals during the financial crisis.
The U.S. Financial Stability Oversight Council, or FSOC , is
pressing a plan that could require funds to set aside capital
against losses or price shares at funds' actual net asset value,
or NAV, instead of being fixed at $1.
Money fund managers have argued in the past that those kinds
of rules would drive away investors. But Wednesday's moves to at
least disclose funds' daily net asset values - and just how
little they change most of the time - could get investors ready
for a shift to actually buy and sell fund shares at the floating
"Get people used to seeing it. Then as change comes down the
pipeline, say floating NAV, people are a little more prepared,"
said Bret Barker, portfolio manager at TCW in Los Angeles.
The moves, if well received by investors, could also bolster
the industry's argument that a shift to a floating share price
is not needed, according to Pete Crane, a long-time money fund
analyst and co-founder of Crane Data, which tracks the industry.
"They're trying to pre-empt the floating NAV," Crane said.
"The point is to show that NAVs don't float."
The U.S. Securities and Exchange Commission, the direct
regulator of the funds and a participant in the FSOC, said it
was pleased with the moves.
"Chairman (Elisse) Walter is encouraged when industry
voluntarily takes steps to provide greater transparency for
investors," agency spokesman John Nester said. SEC staff are
continuing to work on possible reform plans, he said.
Currently, money funds report their actual net asset value
per share only monthly, with a 60-day lag. Fluctuations of the
share prices are typically seen in tenths of a cent or less.
Investors buy and sell shares at a fixed price of $1.
During the financial crisis, however, one major money fund
suffered losses on Lehman Brothers debt it owned and could not
maintain the $1 per share price. When the Reserve Primary Fund
"broke the buck" because of those losses, investors stampeded
out of all funds that potentially could have also owned Lehman
debt, threatening to freeze much of the U.S. borrowing system.
By giving investors more regular updates, fund firms could
assuage the fears that led to the panic. Clients have been
asking for more details lately, David Fishman, co-head of
Goldman's money fund business, said in an interview.
"There's a lot of talk about 'shadow banking' and 'shadow
NAV,' the implication being that things are more hidden,"
Fishman said. "By bringing this out into the open, we can say
these are high-quality products."
JPMorgan said three of its U.S. funds will start to disclose
their daily closing NAVs on the following business day, and that
its other money funds will soon follow.
The bank is the second-largest manager of U.S. money market
funds, trailing only Fidelity Investments, according to Lipper,
a Thomson Reuters unit. Goldman ranks seventh and BlackRock
ninth, according to Lipper.
BlackRock said it would begin disclosing daily NAVs by
January 16 for all its U.S. funds. The firm last month offered a
different approach to head off regulation with a new fee that
would be charged on investor withdrawals in times of
Fidelity is considering moving to a daily disclosure of the
NAVs of its money funds, spokesman Steve Austin said.
Vanguard Group, the Pennsylvania fund firm ranked fourth in
money fund assets by Lipper, has no plans to increase the
frequency of its NAV disclosures. One reason is its retail
investors have not sought more disclosures, spokesman John
Woerth said in an email. Changes in the NAV of its largest money
fund, the $122 billion Vanguard Prime Money Market Fund, have
been "de minimis," the firm said.
Federated Investors Inc, the third-largest manager
of U.S. money funds, declined to comment.
Goldman said it will disclose the previous day's NAV of its
three U.S. commercial paper funds daily, starting on Wednesday.
It will begin disclosing daily NAVs of its six U.S. government
and tax-exempt funds next week. The daily price of its six
offshore funds will be available by the end of the year.