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Annual Fair Valuation Survey Shows Majority of Boards Revised Policies in 2016

Deloitte recently reported the results of its fourteenth annual Fair Valuation Pricing Survey of 96 mutual fund firms. The findings indicate that a majority of survey participants changed or revised their valuation policies in the past year although that percentage decreased from 73% in the prior year to 63%.  The changes included: the addition of more pricing sources and investment types as well as changes to pricing committee composition, responsibilities, and/or meeting frequency. The survey found that about 25% of participants sought ways to improve the efficiency of the valuation process, reduce redundancies and increase the use of automation. With respect to board governance of valuation, the survey found that:

  • 60% of participants reported that the full board, a committee of the board, or one or more board members receive information regarding price challenges, compared to 57% in the prior year.
  • 36% reported that the percentage of the overall board agenda dedicated to valuation increased.
  • 61% reported that their boards are receiving information on instances in which the fund groups did not use the primary pricing source, an increase from 32% in the prior year.

The Deloitte survey aggregates the views of 96 mutual fund firms, and participants hold more than $5 trillion in assets under management in registered funds. The survey took place between June and August 2016.