UPDATE 1-Top sponsors join move to post daily money fund values
BOSTON, Jan 11 (Reuters) - Two more money market mutual fund managers, Fidelity Investments and Federated Investors Inc , said on Friday they will begin to post daily fund asset values, as the popular savings sector feels increasing pressure from regulators to be more transparent and less susceptible to mass redemptions.
Fidelity and Federated, the largest and third-largest U.S. fund sponsors in the $2.6 trillion market, joined other big fund companies which earlier this week also promised to provide daily, instead of monthly, values of their money funds including Goldman Sachs Group Inc, JPMorgan Chase & Co and BlackRock Inc.
The fund companies said the new disclosures will demonstrate to investors that money funds are stable because the share values tend to vary by only miniscule amounts from day to day. The new disclosures could also head off calls from regulators for more costly and potentially disruptive reforms.
Investors buy and sell money market shares at a fixed price of $1 even though the actual net asset value, or NAV, per share may vary by a few hundredths of a percent. Currently, fund companies only disclose those fluctuations on a monthly basis and even then after a 60-day lag.
Investors' lack of information about the value and quality of fund assets helped create a wave of panicked withdrawals from money funds after Lehman Brothers went bankrupt in 2008. Regulators say such a panic could recur unless more changes are made, such as ending the fixed $1 per share price policy and moving to floating share prices, like all other mutual funds.
Making the more frequent disclosures could be aiming to show regulators there are hardly any fluctuations away from $1 in practice, so no further rules as needed, said Lance Pan, director of investment research at Capital Advisors Group.
Alternatively, Pan said, some companies might be trying to calm customer fears if regulators force them to adopt the floating NAV after all. "They may want to use this to gauge public response before committing to the floating NAV concept," he said.
Fidelity and Federated have been among the companies most vocal in opposing proposed new regulations. Unlike large banks, the two fund firms do not have nearly as much customer money invested in alternatives like certificates of deposit or checking accounts.
Boston-based Fidelity said it will begin the daily disclosures on Jan. 16. Fidelity has about $430 billion in money market fund assets under management.
"Providing more frequent disclosure of these minute changes will help investors better understand how vigilant we are in keeping our money market mutual funds safe," Nancy Prior, Fidelity's President of Money Markets, said in a statement.
Federated will start publishing the prior day's daily market NAV for five of its largest prime money market funds during the week of Jan. 21, spokeswoman Meghan McAndrew said. The company might publish daily data for other funds if clients demand it.
"From a competitive standpoint, we believed it was necessary to provide the information," she said. "In the process we make an already transparent investment product even more transparent."
Asked about whether the company might be laying the groundwork for more regulatory changes, McAndrew said Federated remains "ardently opposed to a floating NAV."