The nature of the CIFSC category changes vary widely. Some funds shifted from being a global fixed-income mandate to a global equity mandate as they crossed the key threshold of 60% stock exposure. Other funds, meanwhile, transitioned from being global equity funds to emerging-market equity funds as 90% of a given fund’s equity investments fell into the EM bucket.
“Over the past 12-month period, we saw two peaks in activity, including over 400 changes this February,” Carr-Pries said. “I think it just emphasizes the need to be able to stay on top of these things … you can expect risk rating changes after the introduction of a new product, but when it suddenly gets exposed to risk in a different way than you expected, it’s something you have to think about.”
Looking at MERs, InvestorCOM found nearly 40,000 changes over the 12-month period, nine tenths (89%) of which were less than or equal to 10 basis points. The changes were evenly split, with 52% showing upward moves, though Carr-Pries noted that larger-magnitude changes tended to be reductions rather than increases.
With respect to time horizon data, InvestorCOM saw 2,300 changes across the tens of thousands of funds covered by ShelfMonitor. Notably, 1,900 of those changes were newly reported values, which Carr-Pries said was spurred by conversations with clients who saw that as a gaping gap in the fund data they originally got from asset managers.
“I think one of the side effects of the CFRs is raising the bar on data quality,” he said. “Dealers and advisors are making a lot of decisions based on the data that’s presented to them, which is probably through a data provider rather than directly from a sales rep, or a national accounts person from a company.”
