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@hank: I bet the fund companies know about 'selective disclosure' regulatory limitations. Don't forget, however that institutions, such as pension plan sponsors and individual REIs who advise wealthy clients have to do their due diligence before and during the investment period. They constantly speak to fund companies (well, at least quarterly). So I bet no new facts are disclosed. However, much could be learned from these "institutional" communications.
Your frequent conversations with fund managers, while commendable, raises one concern - being related to the following: As I understand it, open-ended mutual funds are required by a 2004 SEC amendment to existing policy to publicly disclose their portfolio holdings quarterly. This rule replaced an older one requiring semi-annual reporting of holdings. Most fund companies argued strenuously against the adoption of more frequent reporting during the period of public debate, arguing among other things that (1) The new policy increased the likelihood of "front-running" of mutual fund sales and purchases and (2) It promoted "load riding" whereby investors could replicate a fund's holdings without having paid for the research costs.
- The first link is to a 2001 position paper by the Investment Company Institute stating their reasons for opposing more frequent disclosure. They lost the battle, but I still find their logic interesting and somewhat compelling. http://www.ici.org/pdf/per07-03.pdf
- Virtually all mutual fund companies have written policy governing disclosure of portfolio holdings. These appear quite stringent. The following (inked) one from Dreyfus allows a manager (or his designee) to reveal a fund's top 10 holdings to non-company affiliated individuals - but only if those holdings have been previously made available to the public. Violations of policy must be reported to the company's compliance officer. https://public.dreyfus.com/policies-information/holdings-disclosure.html
What I'm wondering is what you can learn from speaking to a fund manager that isn't already public knowledge available on the fund's website, in their annual and semi-annual reports, or in their SEC required quarterly disclosures? I like to suppose that if I phoned Dodge and Cox one of their managers would talk with me. (I'd thank them for making me a lot of money over the years.). However, if he/she revealed to me that they were considering adding to their position in Company X sometime in the next few weeks, I'd be a bit alarmed. I'd wonder who else had already been tipped-off about the impending purchase and whether the stock's price had already been driven higher as a result of this advance knowledge.
Just some thoughts on this whole issue of calling up fund managers.
Hi Hank,
Thanks for your thoughts and a few more of mine.
As I stated in both posts, other than speaking with Morty Schaja (which I also mentioned in a post some months ago), I am not speaking with "fund managers". I am speaking with someone on the "team". I tried to emphasis that by using the word 7 times. For example, this includes analysts, statisticians, Chief Marketing Officers, and others.
As stated in my most recent post, " Many times I do not get pinpoint answers, which probably relates to SEC issues". To alleviate concerns, I will be more precise. For example, I would not get a pinpoint answers to questions #2 and #4. But that would not prevent me from asking, hoping for a response that might contain some value to me.
Asking for an opinion on sectors that attributed to under performance is something that happened in the past. No secret, albeit I did not have, but wanted the information. Or asking "where the portfolio managers believe the best valuations currently exist" (small, mid or large cap), is not giving me any proprietary information.
Regarding your question:
"What I'm wondering is what you can learn from speaking to a fund manager that isn't already public knowledge available on the fund's website, in their annual and semi-annual reports, or in their SEC required quarterly disclosures?", I do not know how to answer that any differently than I have:
"All the dated quantitative information is certainly in public documents such as their Statuary Prospectus, Summary Prospectus, Statement of Additional Information, and their Semiannual and Annual Reports. I am searching for recent changes and current thinking.
And then I am back to " Many times I do not get pinpoint answers, which probably relates to SEC issues".
@Mona - Thanks for the thoughtful and courteous response. I'm wondering if it would make a difference if I edited my earlier post to read "management" rather than "manager"?
Seems to me that someone "on the team", as you phrase it, would likely be close enough to management/manager as to be extremely cautious about revealing much for fear of running amuck of SEC regulations and the company's own disclosure policy. I linked the policy at Dryfus because it was the clearest I could find and, unlike many others, is a separate publication rather than being woven into the larger legal fabric under which the fund company operates. Per this document, anyway, even the disclosure of company "analytical data" that is not already in the public domain is considered a violation. --
However, I do recall a couple instances of speaking to someone close to operations. Once I phoned Strong Funds after a fund began acting erratically following a long period of stability. The only answer they would provide was: "The manager is positioning himself".
The other was when I called with questions about a new fund that was about to open at Price. One of the (prospective) managers came on the phone and clarified the issue for me.
Comments
I bet the fund companies know about 'selective disclosure' regulatory limitations. Don't forget, however that institutions, such as pension plan sponsors and individual REIs who advise wealthy clients have to do their due diligence before and during the investment period. They constantly speak to fund companies (well, at least quarterly). So I bet no new facts are disclosed. However, much could be learned from these "institutional" communications.
Hi Hank,
Thanks for your thoughts and a few more of mine.
As I stated in both posts, other than speaking with Morty Schaja (which I also mentioned in a post some months ago), I am not speaking with "fund managers". I am speaking with someone on the "team". I tried to emphasis that by using the word 7 times. For example, this includes analysts, statisticians, Chief Marketing Officers, and others.
As stated in my most recent post, " Many times I do not get pinpoint answers, which probably relates to SEC issues". To alleviate concerns, I will be more precise. For example, I would not get a pinpoint answers to questions #2 and #4. But that would not prevent me from asking, hoping for a response that might contain some value to me.
Asking for an opinion on sectors that attributed to under performance is something that happened in the past. No secret, albeit I did not have, but wanted the information. Or asking "where the portfolio managers believe the best valuations currently exist" (small, mid or large cap), is not giving me any proprietary information.
Regarding your question:
"What I'm wondering is what you can learn from speaking to a
fund managerthat isn't already public knowledge available on the fund's website, in their annual and semi-annual reports, or in their SEC required quarterly disclosures?", I do not know how to answer that any differently than I have:"All the dated quantitative information is certainly in public documents such as their Statuary Prospectus, Summary Prospectus, Statement of Additional Information, and their Semiannual and Annual Reports. I am searching for recent changes and current thinking.
And then I am back to " Many times I do not get pinpoint answers, which probably relates to SEC issues".
Best Regards,
Mona
Seems to me that someone "on the team", as you phrase it, would likely be close enough to management/manager as to be extremely cautious about revealing much for fear of running amuck of SEC regulations and the company's own disclosure policy. I linked the policy at Dryfus because it was the clearest I could find and, unlike many others, is a separate publication rather than being woven into the larger legal fabric under which the fund company operates. Per this document, anyway, even the disclosure of company "analytical data" that is not already in the public domain is considered a violation.
--
However, I do recall a couple instances of speaking to someone close to operations. Once I phoned Strong Funds after a fund began acting erratically following a long period of stability. The only answer they would provide was: "The manager is positioning himself".
The other was when I called with questions about a new fund that was about to open at Price. One of the (prospective) managers came on the phone and clarified the issue for me.