Vanguard Sticks To Course, Will Maintain Fixed NAVs Policy


Vanguard Group will not change the frequency of its net asset values (NAVs) disclosure because the fluctuation of its biggest money market fund is de minimis,” according to the company’s spokesperson, Linda Wolohan.

Wolohan said, the company does not see an increased demand for a more frequent disclosure from Vanguard’s clients, who are primarily retail investors. She said, “Given the small degree of fluctuation and lack of demand from our clients, Vanguard currently has no plans to increase the frequency of money market fund NAV disclosure.”

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Some of the major financial institutions that offer money market funds decided to disclose the net asset values of some of their funds on a daily basis. These companies include Fidelity Investments, JPMorgan Chase & Co. (NYSE:JPM), BlackRock, Inc. (NYSE:BLK), and Goldman Sachs Group, Inc. (NYSE:GS). The Bank of New York Mellon Corporation (NYSE:BK) said it would do the same in the future.

The decision of Vanguard to maintain its existing schedule of NAV disclosure surprises many in the industry because Vanguard Prime Money Market Inv (MUTF:VMMXX)’s has $120 billion assets under management. It is one of the largest fund in the country, and many anticipated that it would also increase the frequency of its NAV disclosure because it promotes transparency and plain talk to its investors.

Peter Crane, founder of Crane Data explained that sometimes, frequent disclosures confuse ordinary or retail investors. According to him, money market funds with retail investors as client base are generally reluctant in disclosing technical information. Crane said, “It would be costly for [Vanguard] to answer all the ridiculous questions they would get from overloaded customers. They just don’t have the infrastructure and capital to spend on frivolous things.”

Crane further explained that the decision of other major financial institutions with sophisticated institutional clients to implement floating NAVs is practical for them. However, he was surprised that Fidelity Investments and Charles Schwab joined the pack because both firms have retail clients. Crane said, “It’s surprising that Fidelity would do it too. Charles Schwab doing it was a shocker as well.” Crane believes the firms also joined the pack because they want to show that they are reasonable and flexible in following regulations.

He said, “That indicates that it’s an effort to forestall more dramatic regulation, and, I think, in order to appear reasonable and flexible in the regulatory battle.”

The Secretary of the Treasury who serves as chairman of the Financial Stability Oversight Council implemented the floating NAVs due to the inaction of the SEC last year.