(September 6 – 15:30 ET) – The Investment Funds Institute of Canada has published bulletins on correcting portfolio net asset value errors.
The bulletins, listed in the regulation section of the IFIC Web site, describe IFIC’s recommendations for proper error correction. In 1999, IFIC formed a subcommittee to develop a standard for the correction of portfolio NAV errors.
That committee wrote a preliminary report which was then circulated within the industry for comment. A final report by the subcommittee was approved by IFIC’s Board of Directors on June 12. At the direction of the board, IFIC staff have prepared Bulletin #22, which articulates the standards for correction recommended in the subcommittee’s final report.
The bulletin provides guidelines for voluntary adoption by IFIC members and the industry in general. The key guidelines recommend that if an error occurs in the calculation of the fund’s net asset value, the error should be corrected retroactively, subject to certain materiality thresholds.
The materiality threshold at which investor accounts should be corrected and the fund should be made whole is 50 basis points of NAV. The correction of investor accounts is subject to a further materiality threshold of $50.
The scope of the standards is based on the understanding that fund managers have a fiduciary obligation for pricing discrepancies in the calculation of the NAV of an investment fund.
-IE Staff