One of the biggest complaints investors have against mutual funds is that they are priced only once a day, limiting their ability to jump out of a tanking fund before the price craters too seriously, MarketWatch reports.
Perhaps following the lead of Rydex Investments, that could change. The company has been allowing investors who trade directly with it to receive fund net asset values twice a day. Now, Rydex is extending that to investors who buy shares through brokerages.
Perhaps due to the increasing competition from exchange-traded funds—particularly the possibility that actively managed ETFs might become a reality—more fund complexes will adopt this pricing structure.
“Traditional fund managers are concerned about how actively managed ETFs could come in with a competitive edge,” said Geoff Bobroff, president of Bobroff Consulting. “Pricing more often is one way fund firms could respond, trying to keep the ETFs at bay.”
Then again, Fidelity Investments used to offer hourly pricing on its Select sector family of funds but abandoned the service a few months ago due to lack of investor interest. In addition, calculating prices more frequently increases funds’ cost.