Pricing and Valuation Challenges for Mutual Funds

Abstract

The panel emphasized the importance of transparency across the valuation process. One of the biggest changes after the financial crisis is the regulatory requirements on consistency, transparency, and auditability. Transparency has been frequently discussed in the industry. Transparency is important when pricing vendors provide bond valuation. Information, such as assumptions used and influence of market color, are needed. However, transparency is not only about the valuation but also about the process to derive bond valuations, including the use of both mark-to-market and mark-to-model. Information, such as valuation process, compliance process, and methodology used are all important to clients. It is also critical to use consistent processes across valuations, with complete auditability into the chosen methodology.