Deutsche Bank's DB Advisors has become the first money market mutual fund complex to sign up for Clearwater Analytics money fund transparency initiative. DB will provide money fund portfolio holdings, initially twice monthly, and additional information to Clearwater's new money fund module, which will allow for flexible summary reporting and risk measurement outputs on the fund portfolios.
DB's Joe Sarbinowski and Kevin Bannerton tell us, "The rationale and reason is to continue to build confidence in the money fund industry. We've weathered the storm, but clients are looking for more transparency and analytics, and a way to make more informed decisions around risk attributes." They add, "We will respond to what the market needs as far as frequency," but that their client survey indicated that daily holdings would be "overkill". Investors need to respond to auditors and investment committees, and to immediately gauge their headline risk, the two say.
Sarbinowski tells us, "It's not so much about the frequency or the holdings; people want to know what the information means." it has to be "in-depth enough that clients can feel comfortable with the investment decisions we make". He says the new tool will go above and beyond holdings, "providing the flexibility to look at various data formats". It will provide information such as ABCP credit enhancements and liquidity support, a spectrum of maturities, and information on the financial sponsor for RFI's.
Regarding SIVs, which were held by over 2/3 of money fund advisors, DB says it has no more as of its April 30 filing and didn't hold any problem issues or have to infuse capital to support their money market funds. "We're happy that that's a past story for our product," says Sarbinowski. Bannerton says that the "lack of understanding around asset classes" added to the past turmoil. "If we can educate around risk attributes, we may prevent a knee-jerk reaction."
"This is to try to make investors lives easier to see what is happening in the porfolio," DB says. "There may be an acute focus now," but the need for transparency is a longer-term trend and goes beyond money funds says Bannerton. "There will be a new standard of surveillance. Clients want to see that processes are in place to monitor risk on an ongoing basis." DB Advisors, which is the new name for Deutsche Bank's global institutional investment management business, says they're ramping up for a July 1 launch.
