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Reaching a New Standard

by Susan Dargan, Senior Vice President and Chief Operating Officer, State Street International (Ireland) Ltd

As investors in offshore money market funds, treasurers increasingly look for disclosure of portfolio holdings from fund providers. But the question remains: How easy is it to compare data across different fund families? The Institutional Money Market Funds Association (IMMFA) recently provided guidance on a standardised portfolio holdings disclosure to help investors make such comparisons, explains Susan Dargan, State Street.

The events of the financial crisis represented a turning point for investors in money market funds (MMFs). Amid the fallout of the Lehman Brothers collapse, and the ‘breaking of the buck’ of the Reserve Fund in the US, investors focused their attention on their potential risk exposures in MMFs. Investors have subsequently shown an increased appetite for disclosure of portfolio holdings, to gain a clearer picture of the assets being held by funds and enable them to assess their risk exposures within a fund structure or across multiple funds.

Historically, investors only had access to portfolio holding data on an annual basis via the Financial Reports, and MMF managers did not typically provide holdings information outside of the annual reporting process. However, the need to help investors understand their exposures and aggregate data has led many fund managers to disclose holdings data more frequently.

As demand from investors has grown for the provision of some form of disclosure — or ‘transparency reporting’ as it is often known — the need for the industry to agree on a standardised dataset has come to the fore. With different types of reporting provided across the industry, the need to achieve comparable datasets has become a significant focus for investors.