Fair value pricing can be fairly unfair: Money managers rely on little price info

What is fair value when it comes to the price of a portfolio?

Scarcely any agreement exists on the issue among mutual funds, hedge funds, funds of funds and traditional money managers, according to a study by Capital Management Risk Advisers Inc. in New York.

More than 60 financial institutions - with combined assets of about $2 trillion - participated in the study.

It’s an issue that doesn’t get much attention, but it is one that does have an affect on portfolio’s returns, says Leslie Rahl, president of Capital Management.

“If you don’t even agree on what the portfolio is valued at today, how can you agree on what the risk is that it might lose money tomorrow?” says Ms. Rahl.  

July 30, 2001