A mutual fund industry group warned the SEC today against increasing the frequency with which funds must disclose their holdings to investors. "It would be a grave error for the commission to mandate more frequent portfolio holdings disclosure by all funds, Craig Tyle, general counsel at the Investment Company Institute, Washington, wrote in a letter to Paul Roye, director of the SECs division of investment management. More frequent disclosure would allow professional traders and others to "front run a mutual funds trades by helping to identify the stocks the fund is in the process of buying or selling. It also would allow speculators to get a free ride by copying the mutual funds investment strategies.
Instead, the mutual fund trade association prefers streamlined shareholder reports and giving investors a list of only the 50 largest holdings, or those that exceed 1% of a funds assets, instead of a list of all the funds holdings.
Currently, funds are required to disclose their holdings twice a year.