Investment companies are approaching some key dates to meet SEC requirements, passed early this year, for the calculation and release of after-tax data on mutual funds.
The technical details could be nightmarish for fund companies, but planners and their clients could be big winners: Not only will they reap the benefits of the after-tax data, but the new systems that mutual funds will be adopting will be able to provide a lot of other information as well, making fund selection a more rational process.
This needs to happen soon; the deadlines are upon the investment companies, said Bruce Feibel, a product manager at Eagle Investment Systems of Newton, Mass., which provides financial calculation software to Putnam Investments and other major players. On Dec. 1, any fund that advertises itself as tax efficient has to note after-tax performance in its advertisements. (The SEC pushed this back from Oct. 1.)
Starting Feb. 1, 2002, all fund prospectuses must have the after-tax data included. "This has forced companies to re-evaluate their software," said Feibel, and the result could be new ways of handling data that go beyond SEC requirements. "For example, global funds could list both U.S. and local currency returns," he said.
Eagle is creating custom screens for fund managers who will be able to specify what additional information their customers will get. Funds taking advantage of new software capabilities may end up having an edge in providing planners with more useful information -- an edge that goes beyond just performance evaluation. "We're dealing with two issues here," said Feibel. "The need to meet SEC requirements, and the demand for more information."