January 1 was the much-anticipated start of a new millennium, but it turned out to be just another trading day for the mutual fund industry. Fund companies that had spent millions of dollars to expand their computer data fields from two digits to four in order to accommodate the year 2000, experienced no problems retaining files or pricing securities, according to the SEC. The SEC announced last Wednesday it was "step[ping] down its Y2K monitoring efforts."
Mutual fund executives, attorneys and industry consultants said they were relieved as it became clear in the first few days of January that the industry would not suffer any adverse effects from the computer programming switch to the year 2000.
Nearly every mutual fund company had information technology executives and batteries of call center representatives on hand over the New Year's weekend to cope with any problems that might have arisen, according to industry executives. Call volume rose significantly at most firms, but, there were no problems, they said.
The only vestige of the so-called Y2K computer bug that the mutual fund industry will have to remember is that this massive line-by-line programming code overhaul prompted many of the larger firms to overhaul all of their existing systems, said Gavan Taylor, managing director and chief information officer at Putnam Investments of Boston.
Putnam, which spent $35 million on Y2K in the five years leading up to 2000, "took a total inventory of everything - hardware, software, outside vendors, especially investment pricing feeds because we get a lot of pricing feeds in this company," said Taylor. "Everything with software, we inventoried," he said.
As a result, Putnam's technological infrastructure today is completely modernized, Taylor said. Putnam now has new routers, PCs [and] networks, he said.
One of the industry's greatest concerns was that fund companies would be unable to obtain accurate market data to set the daily net asset values of their funds. At deadline, those fears appeared unfounded.
A still graver fear was that the Y2K bug would completely obliterate shareholder records. Putnam defended itself against that eventuality by setting up two data centers, each of which had two operating systems - mainframes and Unix client/server systems - containing duplicate information, said Taylor. Putnam also used two disaster recovery systems vendors: Comdisco of Chicago and SunGard of Philadelphia, Taylor said.
"It's all been pretty much business as usual," said Chris Wloszczyna, a spokesperson for the Investment Company Institute of Washington, D.C.
"It was a big yawn," said Darlene DeRemer, principal of DeRemer + Associates, a mutual fund consulting firm in Wrentham, Mass.
"The preparation for Y2K involved unprecedented coordination among financial regulators within the U.S. and abroad, and we hope to continue these close working relationships through coordination in other areas in the future," said Robert Colby, deputy director of the SEC's division of market regulation, in a statement.