Fidelity Investments will start disclosing the real value of its money market mutual fund shares each day, following a move by three New York firms earlier in the week, as the largest players in the $2.5 trillion market try to stave off tighter regulations.
Boston-based Fidelity, the nation’s largest money market fund manager with $430 billion under its watch, Friday joined Goldman Sachs Group Inc., JPMorgan Chase & Co., and BlackRock Inc. in announcing plans to disclose valuations daily rather than monthly. By Friday afternoon, Charles Schwab & Co., a big Fidelity competitor, followed suit.
Fidelity has vigorously fought efforts to increase regulation of money market funds led by former Securities and Exchange Commission chief Mary Schapiro. The financial crisis prompted fears of a “run” on these funds by anxious investors trying to cash out. The move to be more transparent is the latest effort to hold off regulators.
For investors, little will change. They will still buy and sell money market funds for $1 a share. But the precise market value of the investments in the funds will be tallied and disclosed on Fidelity’s website each day, giving investors a more up to date financial view of their holdings.
Currently, the assets values published monthly by money market funds are about 60 days old.
It was surprising to see several big institutions all make similar announcements about disclosure this week, said Peter Crane, president of Crane Data in Westborough, which tracks money markets. “It’s a sign that funds are getting nervous about serious regulation,” he said, “and a sign that the campaign that regulators have been on is scaring some investors.”
Fidelity declined to say exactly where the new valuations would be posted. Spokesman Adam Banker said they would be “readily available” and easy to find. The price is expected to vary from $1 by only tiny fractions of a penny. Fidelity starts reporting the prices Jan. 16.
Fidelity says it has never had to inject cash into money funds to maintain $1 per share values. But other funds did so in the financial crisis, and the Reserve Primary Fund actually “broke the buck” in 2008, when its holdings in Lehman Bros. were crushed. It was only the second fund ever to break the buck; the other was in 1994.
According the Federal Reserve Bank of Boston, 78 other funds sought capital infusions from their managers from 2007 to 2011, to ensure they did not fall below a $1 share value.
Schapiro failed in her bid to increase capital cushions at money market funds, or to let prices trade at levels above or below $1, in no small part because of lobbying by Fidelity and others. But the federal Financial Stability Oversight Council is now taking up potential new rules; the comment period ends next week.
Fidelity’s fund trustees this week called singling out money markets “a perverse mis-prioritization in light of more pressing financial and economic issues.”