| Disclosure of management of simultaneous funds by mutual fund managers will benefit investors – Asset Managers Forum |
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| 10/06/2004 | |
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The Asset Managers Forum, the US-based association of sellside and buyside operations professionals, lent its full support to a new Securities and Exchange Commission's (SEC) proposal requiring mutual fund managers to disclose their simultaneous (side-by-side) management of other funds on the basis it would benefit investors. "Requiring fund managers to disclose their management of other funds would effectively address potential or perceived conflicts of interest," said Joseph W. Sack, executive director of the Asset Managers Forum's Chief Operating Officers (COO) Group. He pointed out that mutual funds are typically only one part, and often a minority portion, of an asset management firm's overall business, often involved in private equity or hedge fund operations. A full-blown ban on this type of management is not a proper solution, notes the Asset Managers Forum. "While the Group believes disclosure would adequately and appropriately address potential conflicts of interest, it does not believe anyone's interest would be served by an outright prohibition of side-by-side management." Prohibition consequences According to the AMF, such an outright ban could possibly crowd out highly qualified portfolio managers to less regulated investment pools. "Small asset management firms in particular could suffer as they might not have the resources to have separate managers for distinct accounts." Investors would then be hit hard, losing access to the most skilled managers. "The most qualified portfolio managers generally want to be professionally challenged," commented Joseph W. Sack. "These managers would be inclined to accept positions with hedge funds or similar institutional investor entities where a more sophisticated skill set might be needed to manage more complex portfolios." Too much disclosure would not be well-advised according the to AMF's COO group, which believes "that disclosing the identity of an entire management team might affect the flexibility of a fund management company by hampering the ability of senior executives to efficiently allocate the best suited talent to the most appropriate fund based upon changing circumstances." Furthermore, the COO Group opposes rules that would require a fund to disclose a portfolio manager's ownership of securities with respect to each account run by the manager. "Such disclosure could contribute to a talent drain and also be misleading because managers, like all other investors, vary their securities holdings based on their own individual financial situations", said the AMF's statement. J.L. |
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Articles of the same Topic : Corporate governance
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