Fund Directions - Five Areas for Board Focus In The Current Credit Environment

Five Areas for Board Focus In The Current Credit Environment

Michelle Lombardo The current market environment is unknown territory for nearly everyone in the financial system. Boards need to

Mike Malloy keep on top of developments and new regulations affecting their funds and investments, advisors and third-parties. Fund Directions spoke with Mike Malloy and Michelle Lombardo, partner and counsel respectively at Drinker Biddle & Reath, about where boards should focus in the current market conditions.

"Parts of the current financial crisis have some precedent, but the enormity of it is daunting," Malloy said. "Things are happening at a tremendous speed. It's really important that everyone in the industry keep on top of what is going on and that includes boards."

The following are five key areas on which boards should be focusing:

1. Pricing

Pricing is always an important topic for boards. It's especially important when market turmoil creates illiquid securities and hard-to-value investments. "Pricing is one of the cores of the mutual fund business," Malloy said. "If you don't have it right, people are either overpaying or underpaying, and your ability to redeem shareholders may be impaired."

Boards should ensure that their fund's securities are accurately priced, and that the complex's pricing policies and procedures are working as they should. The board of the Heartland Funds was hit hard several years ago when the ...

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Five Areas for Board Focus In The Current Credit Environment