Goldman Publishing Daily Shadow Values of Money Funds
January 9, 2013
Goldman Sachs said it will begin publishing values of the assets held in its money market mutual funds in the United States on a daily basis.
The first funds for which the daily market values will be published are its money market funds that invest in commercial paper. Those values were published today (January 9).
Values for government and municipal funds are expected to start being published in the week beginning January 15.
The values will be calculated based on available market quotations, from a third party pricing vendor or broker, as of 3 p.m. Eastern time each day.
The values, which Goldman calls “market values” of the assets are also some times referred to as “shadow values.''
They are not the value of the share prices, which will remain at $1.00 a share. Goldman is not “floating” the net asset value of each share.
Keeping the value of each share at $1 is a bedrock feature of money market mutual funds.
Goldman, however, appears to be responding to calls by former Securities and Exchange Commission chairman Mary Schapiro and U.S. Treasury Secretary Timothy Geithner to move the industry toward “floating” the prices of shares, to reflect accurately the underlying values of the assets they hold.
That push has come as part of a second wave of responses to the “breaking of the buck” in September 2008 by the Reserve Primary Fund, the nation’s oldest money market mutual fund. That spurred a federal bailout of money market mutual funds, as investors rushed to pull out their funds. The Reserve fund had invested heavily in Lehman Brothers assets and could not maintain the $1 a share fund value when that investment bank cratered.
Goldman, like other firms, has disclosed the market values once a month. The SEC requires funds to calculate and report a fund’s market value on a monthly basis and that value then is made available to investors on a 60-day lag. Now, on Goldman’s web site, investors can get a daily report of the market value.
“We believe that more frequent disclosure and greater transparency will benefit investors. This will have no impact to how fund shareholders transact or the way the funds are managed,” said James McNamara, president of Goldman Sachs Mutual Funds. “It is our belief that this level of transparency will also benefit the ongoing dialogue around potential regulatory changes to money market funds.”
Goldman will calculate the value of its money market mutual funds to the nearest hundredth of a cent each day. Today (January 9, 2012), the market value NAVs were published at $1.0001.