Financial Research Corp. has stated that it will no longer make available firm-specific fund flow data to the general public, the media and others who have not paid to receive it.
Financial Research Corp. has stated that it will no longer make available firm-specific fund flow data to the general public, the media and others who have not paid to receive it.
The Boston-based research firm will continue to make the data available to paying subscribers, most of whom are with mutual fund and asset management companies.
Recently published reports suggest that industry pressure led to the policy change.
While FRC denies that it has been pressured by clients, it acknowledges concern over the citation of its name in published articles mentioning fund outflows and asset declines at many of its subscribers.
"No firm has called us and asked us not to print the flow numbers, and no firm has said they won't buy our products if we publish the numbers," said Sam Campbell, director of research at FRC. "But we know [intuitively] that they would rather not see our name tied to a number like that."
Mr. Campbell noted that for many money management companies, mutual funds represent a small fraction of total assets. Even large fund outflows at these companies, therefore, have a negligible effect on their operations, he said.
Moreover, news organizations frequently use FRC data with no commentary from its researchers to put the data into context, Mr. Campbell said.
"There is very little business value attached to having our name tied to raw data," he said. "We are paid by asset managers for our services, and we are meant to be support for our clients."
Separately, Morningstar Inc., a Chicago-based fund research firm, said it plans to launch a series of data reports and analysis this summer that will include fund flows and assets.
"We are working to expand our capabilities," said Sylvester Flood, product development manager at Morningstar. "There is a lot of investor interest in this."
The new service will be available to the firm's institutional clients as well as the media, Mr. Flood said, and made available on a new website as well as through e-mail.
In addition to breaking out the data by category, asset class and fund groups, the firm will link it to their stewardship-grade information and other proprietary commentary to provide a broader perspective, he said.
While some advisers say they do not rely on fund flow data to make recommendations, they are interested in overall trends.
"It's a shame that [FRC] would do that," said Kevin Brosious, president of Wealth Management Inc. of Allentown, Pa., which does not disclose assets under management. "A lot of clients right now are really tuned in to the whole transparency thing. It's like stepping back into the darkness. That's not good."
Fund flows don't have a significant effect on the decision to recommend funds, said Daniel Traub, vice president of Braver Wealth Management Inc. of Newton, Mass., which manages $400 million in assets, although he does pay attention to flows if they could affect a fund's performance.
"If a fund is doing well and gets some press, it could get inundated with cash and it might close," he said.
Flow data is one more piece of information that advisers examine, said Chuck Gibson, president of Financial Perspectives Inc. of Newark, Calif., which manages $50 million in assets.
"If you are paying attention to the market, it can tell you if there is something else going on that we are not aware of," he said.
Up-to-date flow data can help advisers estimate the liquidity available for their clients to access in funds that have only periodic redemptions. "A lot of outflows can create redemption problems," Mr. Gibson added.
Flow data also can highlight sector trends that some advisers find useful. But some firms are not concerned about the loss of information.
"It's nice to have the flow numbers out there," said Neil Hennessy, president and portfolio manager of Hennessy Funds Inc. of Novato, Calif., which has $1.2 billion in assets. "But it's just another piece of information. It's not going to make or break our business."
E-mail Susan Asci at sasci@investmentnews.com.
