How often you get portfolio holdings information from a mutual fund company depends on who you are.
The official line at such big mutual fund companies as Fidelity Investments, Vanguard Group of Investment Cos. and Putnam Investments is: Full portfolio holdings are provided only in semiannual reports, as required by the Securities and Exchange Commission.
But big institutional players -- including consultants to large defined contribution plans and executives at the plans -- say they can get their hands on that information quarterly.
On the other hand, constituent groups with far fewer assets and less influence -- ranging from strident financial planners and sophisticated individual investors to fund rating groups performing fund analytics to make a buck -- have had much less success.
Fidelity's policy is to provide full portfolio holding information only in the semiannual reports, said spokeswoman Jessica Johnson Catino. When questioned about providing such information to plan sponsors or their consultants, she responded: "We will not discuss client relationships."
Some consultants said Fidelity requires a signed confidentiality agreement before providing the information, an assertion Ms. Catino would not confirm or deny.
Laura McNamara, a Putnam spokeswoman, said the company's policy is to provide full holdings only once every six months. However, she said, the company is "in discussions with a small number of consultants regarding providing them with quarterly information."
Vanguard's official policy is to provide full portfolio holdings every six months to all shareholders, said John Demming, a company spokesman. Consultants are not provided with full holdings information more frequently, he said.
David J. Katz, managing director and a defined contribution plan consultant at BARRA RogersCasey Inc., Darien, Conn., said: "It's becoming the industry standard to provide investment management consultants with holdings information quarterly." There are only "a very small number of hold-outs."
He believes "it's in the interests of mutual fund companies to give us as much information as possible. We need the holdings information to perform the kind of analysis that lets us recommend that a fund (manager) be hired or not."
Diana Jackson, a defined contribution plan consultant at Callan Associates Inc., San Francisco, said her company's requests for full holdings quarterly have not been turned down. Plan sponsor interest in having holdings-based analysis completed more frequently is growing as company finance staffs begin to get as involved in the management of the defined contribution plan as they are in the defined benefit plan.
"Fifteen years ago, record keeping was all that mattered (to defined contribution plan clients). No one even looked at portfolios. The progress since then is great," she said.
Lori Lucas, a consultant at Hewitt Associates LLC, Lincolnshire, Ill., said that while it has been fairly easy for her company to get full holdings information quarterly, it is not automatic. "The argument frequently made for using mutual funds as defined contribution plan options is that they are transparent. But they actually aren't transparent when it comes to holdings."
Desire for information
Mutual fund companies don't seem eager to increase the transparency of fund management beyond the closely knit investment management community.
John Collins, a spokesman for the mutual fund industry association, the Investment Company Institute, Washington, said the push for more information about fund portfolio holdings comes from narrow constituent groups that "feel they have a special need for more knowledge. There will always be this desire for more information," he said, but there is no broad support for changing the regulations to require more frequent updates.
Not surprisingly, one purveyor of mutual fund information, Morningstar Inc., Chicago, has long advocated more portfolio holdings information.
Russ Kinney, mutual fund editor for morningstar.com, the company's online publication, acknowledges "there are very legitimate reasons for fund companies to exercise caution -- there's a whole cottage industry that has sprung up to try to front run Fidelity, Vanguard and Janus."
Still, Mr. Kinney says, "There is little danger in a fund company giving holdings information quarterly with a one-month lag."
Said William Chennault, developer of Overlap software from Overlap Inc., Kansas City, Mo., which analyzes mutual fund portfolio holdings to find duplication: "This is the only business I know of in which you can buy something from me and I can refuse to tell you what you bought."
Earlier this year, Standard & Poor's Corp., New York, introduced the Select Fund Service, which recommends a screened list of mutual funds to financial planners and other financial intermediaries based on performance and portfolio analytics. Fund companies are required to provide, on a confidential basis, full portfolio holdings on a quarterly basis.
Only two companies won't give S&P the data it needs: Fidelity and Putnam. Therefore, said Phil Edwards, managing director and head of S&P's fund services division, their funds won't be on the list.
Portfolio managers at Janus Funds, Denver, were regularly encountering front running because of the company's more frequent-than-average disclosure policies to Morningstar, said company spokeswoman Shelley Grace.
Janus revised its disclosure policy June 1 and pulled back to the six-month industry standard required by the SEC. Janus no longer reports full fund holdings more frequently than quarterly, even in confidence to Morningstar.
Too much knowledge
The change was made, Ms. Grace said, because the performance of Janus' portfolio managers was hampered by so much public knowledge of fund managers' stock and bond positions. While Ms. Grace stressed that Morningstar never violated its contractual obligation for confidentiality, it did make those full portfolio holdings available on its Principia software product, which is widely used by plan sponsors, consultants and financial intermediaries.
To avoid front running, the Thornburg Funds, Santa Fe, N.M., removes a stock name from portfolio listings on its Web page (www. thornburgfunds.com) as soon as it is completely sold and adds stock names only when the target position has been fully achieved, said William V. Fries, managing director and portfolio manager of the Thornburg Value and Global Value funds.
Andrew Gillette, a consultant at Cerulli Associates Inc., Boston, predicted that the transparency of companies such as Thornburg will push more smaller and mid-sized fund companies into providing more portfolio information.
Some very large mutual fund managers, particularly those with a large defined benefit plan base of clients on the separate account side, have never balked at sharing similar holdings information for their mutual funds with sponsors and consultants. A few, like UBS Brinson, Chicago, also provide this information to any shareholder who asks, said Steven Saner, senior business developer.
As Davis Selected Advisers LAP, New York, moved more into the institutional realm from a retail focus, management began to provide full fund holdings quarterly to some shareholders, said Peter Sackman, institutional marketing manager.
The confidential agreement ensures that the "point of distribution is very tightly controlled. For the moment, it's a value judgment about who we provide the information to. Now it's to the consultants of institutional clients and the institutional consulting arm of some brokerages," he said.