Funds warned over window dressing

Funds warned over window dressing
June 29, 2010 - 6:39PM
AAP

The companies watchdog and the Australian Securities Exchange (ASX) say they will closely monitor mutual fund and portfolio managers for any sign of window dressing to improve performance at the end of the financial year.

Window dressing is a  deliberate strategy of price manipulation to improve the appearance of portfolio/fund performance before presenting information to clients or shareholders.

Australian Securities and Investments Commission (ASIC) deputy chairwoman Belinda Gibson said window dressing distorted a portfolio valuation at a time that may benefit a fund manager to the detriment of current and potential unitholders.

"Investors may not only be looking at their funds performance through rose coloured glasses, they may also be paying higher performance fees than are necessary," Ms Gibson said in a statement on Tuesday.

ASIC is about to take over responsibility for the supervision of real-time trading on Australian licensed markets.

Ms Gibson said stock brokers and indirect market participants should be wary of clients placing orders close to the end of business on 30 June, which may seek to set a closing price for a security higher than would otherwise be the case.

ASIC and ASX surveillance teams would be monitoring end of financial year trading and exchanging notes, she said.

© 2010 AAP