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New Interactive Data Study Reveals that Approximately 91% of International Mutual Funds Currently Employ a Systematic Fair Value Methodology
Nearly Half of These Funds Were Estimated to Employ Fair Valuation Daily
2 October 2007 - Bedford, Mass.
Interactive Data Corporation (NYSE: IDC), a leading provider of financial market data, analytics and related services, today announced that independent research from its Pricing and Reference Data business has identified, through statistical analysis, that international mutual funds have used their fair value procedures more frequently over the past few years. These findings are contained in a study conducted by Robert Haddad, senior manager of evaluated services, Interactive Data Pricing and Reference Data.
In his research, Haddad reviewed public net asset value (NAV) data for 166 U.S. mutual funds investing in international equities, each representing a distinct fund family, from April 2004 to March 2007. Haddad analyzed the use of “trigger levels” with respect to relevant proxies, sometimes referred to as benchmarks, which are often used by funds as an input to help determine when to utilize a fair value methodology.
For example, a fund may decide to use its fair value procedure if a proxy, such as the S&P 500® Index, moves by 50 basis points (bps) or more between the time that the London Stock Exchange closes and the time the fund determines its NAV. Haddad estimated that approximately 91% of the fund families in the study currently employ a systematic fair value methodology; with 42% of the funds estimated to use fair valuation every day (i.e. 0 trigger). By contrast, he estimated that approximately 67% of the funds employed fair valuation procedures three years ago, with 20% of the funds estimated to have used such procedures on a daily basis. A complete description of the methodology and the results of the study are available at http://www.interactivedata-prd.com/pdfs/WhitePaper13-20070809.pdf.
“A number of factors in recent years, including heightened regulator scrutiny and the notion that a systematic approach to fair valuation can more effectively reflect current market conditions, have led to a near universal acceptance of employing a fair value methodology to estimate the value of international equity securities at the time of NAV calculation,” said Robert Haddad, senior manager of evaluated services, Interactive Data Pricing and Reference Data. “This is evidenced by the significant interest in Interactive Data Pricing and Reference Data’s Fair Value Information Service, which is currently utilized by more than 150 fund complexes after being introduced just a few years ago.”
About Interactive Data Corporation
Interactive Data Corporation (NYSE: IDC) is a leading global provider of financial market data, analytics and related services to financial institutions, active traders and individual investors. The Company's businesses supply time-sensitive pricing, evaluations and reference data for more than 3.5 million securities traded around the world, including hard-to-value instruments. Many of the world's best-known financial service and software companies subscribe to the Company's services in support of their trading, analysis, portfolio management and valuation activities. Through its businesses, Interactive Data Pricing and Reference Data, Interactive Data Real-Time Services, Interactive Data Fixed Income Analytics, and eSignal, the Company has approximately 2,200 employees in offices located throughout North America, Europe, Asia and Australia. The Company is headquartered in Bedford, Mass. Pearson plc (NYSE: PSO; LSE: PSON), an international media company, whose businesses include the Financial Times Group, Pearson Education, and the Penguin Group, is Interactive Data Corporation's majority stockholder.
Interactive Data Pricing and Reference Data provides global securities pricing, evaluations and reference data designed to support financial institutions’ and investment funds' pricing activities, securities operations, research and portfolio management. Interactive Data Pricing and Reference Data collects, edits, maintains and delivers data on more than 3.5 million securities, including daily evaluations for approximately 2.5 million fixed income and international equity issues. Interactive Data Pricing and Reference Data specializes in ‘hard-to-get’ information and evaluates many ‘hard-to value’ instruments.
Pricing, evaluations and reference data are provided in the US through Interactive Data Pricing and Reference Data, Inc. and internationally through Interactive Data (Europe) Ltd. and Interactive Data (Australia) Pty Ltd.
For more information about Interactive Data Corporation and its businesses, please visit www.interactivedata.com
Interactive Data and the Interactive Data logo are service marks of Interactive Data Corporation.
For More Information:
Investors
Andrew Kramer
Tel: +1 781-687-8306
Email: andrew.kramer@interactivedata.com
Media
Sue Mitchell (European media)
Tel: +44 (0)20 7825 8076
Email: sue.mitchell@interactivedata.com
John Coffey (US Media)
Tel: +1 781-687-8148
Email: john.coffey@interactivedata.com
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