"Shadow" NAVs reported for BofA Funds
"Shadow" NAVs reported for BofA Funds says a release from BofA Global Capital Management. Entitled, "BofA Global Capital Management Reports the BofA Funds' "Shadow" NAVs," it says, "In January 27, 2010, the Securities and Exchange Commission (SEC) amended Rule 2a-7 under the Investment Company Act of 1940 to better protect money market funds during periods of market stress. The changes included tougher requirements regarding credit quality, minimum liquidity levels and concentration limits, as well as enhanced disclosure requirements. Among the new rules issued by the SEC is the requirement that money market funds disclose their market based net asset value per share (referred to as the 'shadow' NAV), which is the market value of the fund's securities at a given time. Shadow prices routinely fluctuate around a fund's stable NAV -- which is determined using the amortized cost method of valuation -- due to factors such as changes in interest rates and portfolio composition. Under Rule 2a-7's accounting method, the mark-to-market value of a fund with a stable NAV of $1.00 per share can range between $0.9950 and 1.0049 per share without 'breaking the dollar' (requiring the fund to reprice its shares at a value other than $1.00).... We at BofA Global Capital Management, the sponsor of the BofA Funds, believe the additional transparency achieved by the SEC's disclosure of shadow NAVs will promote greater portfolio transparency, an important benefit for money market fund investors." The BofA Funds shadow NAVs range from 1.0000 to 1.0009, according to the document. See also, New York Fed's "Reverse Repo Counterparties List" and "Fitch Downgrades Alpine Municipal Money Market Fund to 'AAmmf'."
