Market unrest, the credit crisis and an updated FAS 157 are prompting mutual fund companies to be more meticulous about fair value pricing,
Seventy-four percent have altered their valuation policies and procedures in the past year, with 63% saying FAS 157 was directly responsible for doing so.
Thirty-seven percent said they have added internal controls as a result of the credit crisis, and 50% seek more than one quote for fixed income securities.
More than 75% are asking pricing services and brokers for details about how they arrive at prices, and 46% said that their portfolio managers and/or traders are creating pricing reports for fund accounting top management executives.
Today, more than 46% have at least two full-time staffers devoted to fair value, whereas only 29% did last year.
The report was based on surveys of 50 asset managers running more than 2,700 funds with aggregate assets of $3.5 trillion.
Mutual funds have been challenged over the last year to perform daily pricing in very uncertain times, said Cary Stier, head of asset management services for Deloitte. Mutual funds are making the necessary changes, whether they involve people, process, policies or technology. Its vital that mutual funds continue to exhibit the commitment, teamwork and quick response that will be key to providing investors with the truest measure of their investments value.
