Fair Valuing of Portfolio Securities: Responsibilities of Fund Managers and Directors

By David R. Evanson

Privately Published, Winter, 2005

Summary: The valuation of portfolio securities is the cornerstone of the investment management industry. Securities valuations represent a significant day to day responsibility for fund management and directors. However, market timing scandals, increasingly interlinked capital markets and a broadening of securities held in mutual funds have brought to light new thinking and new rules about the fair valuing of portfolio securities. I worked closely with professionals in Deloitte's financial services and investment management practice to help author this white paper which discusses why fund managers and trustees must now operate within a broader context and apply fair value procedures in a fund’s daily operations rather than as a contingency procedure applied when the fund’s board and or management believes pricing or other valuation irregularities might be present.