Perpetual changes fund valuation methodology
Perpetual has decided to change the valuation method for the underlying investments in its Exact Market Cash Fund.
From today, the manager will value the underlying investments in its Exact Market Cash Fund on the basis of their total return to maturity, rather than continuing with the current valuation method of marking-to-market on a daily basis.
Perpetual's statement to the Australian Securities Exchange said the underlying fixed income assets would be valued at yesterday's market price, which represents a discount to face value for many investments. Any discount would be amortised over the term to maturity, Perpetual said.
Perpetual said this change in valuation methodology is consistent with the way the portfolio is managed, and furthermore would "reduce the flow-on effect of volatility on Perpetual's profit and loss and cash flow statements".
The change in valuation methodology would continue to recognise any impairment losses, the manager said, and would not affect the returns for investors.
In February Perpetual announced greater than expected mark-to-market losses within the Exact Market Cash Fund, largely attributable to the repricing of Australian-issued residential mortgage backed securities.
The company told the Australian Securities Exchange that the mark-to-market losses on the Exact Market Cash Fund for the 2009 financial year stood at $24.3 million — a $9.6 million increase over the mark-to-market losses reported in early December last year.
The Perpetual announcement said investors in the Exact Market Cash Fund had not been impacted by the losses.
AUTHOR
Mike Taylor
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