MutualFundWire.com: Jaffe: Fundsters Need to Go Back to Kindergarten

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Monday, November 25, 2013

Jaffe: Fundsters Need to Go Back to Kindergarten

Ah. Kindergarten.

It was a simpler time. Cookies, nap time, those damned blocks.

MarketWatch columnist Chuck Jaffe writes that fundsters would do well to remember the lessons of fairness from that esteemed era, i.e. if you wanted to give a friend a treat, you had to have enough for the entire class.

The lesson, Jaffe writes, could also be applied to the subject of Big Data, in which humungous amounts of fund information is gathered and analyzed in order to create trading advantages.

The treats involved in this game are the portfolio fund data that managers and traders use to try to beat each other. The issue is how that information is released.

A key issue underlying the problem is how portfolios are released. While funds are required to release their holdings every quarter, many give out that information monthly, but limit the extra distribution to research firms, institutional investors like pension funds, and third parties that have what is routinely called “legitimate business interests.”