Firms Try to Reassure Investors
U.S. mutual fund companies, which hold a combined $7 trillion in assets, were jolted by Tuesday’s terrorist attacks, and some firms took extra security measures but said investors need not worry about account access or records.
Discount brokerage giant Charles Schwab Corp. evacuated its World Trade Center branch, and the firm’s New York employees were believed to be safe, said spokesman Glen Mathison, speaking from the firm’s thinly staffed San Francisco headquarters.
Customer phone lines remained open, and Schwab’s offices across the nation were “staying open as much as they can,” he said.
Like other firms, Schwab, which operates a major mutual fund supermarket as well as the leading online stock brokerage, was watching developments to determine today’s staffing needs and any other steps it may take this week.
Boston-based Fidelity Investments, the nation’s largest fund company with about $565 billion in its stock and bond funds, shut investor centers Tuesday in Los Angeles, New York, San Francisco and other cities. But phone lines and some of its about 80 centers stayed open.
For three major fund firms based at the World Trade Center, ramifications of the attack--including any human toll--could not be determined. Financial site Morningstar.com noted the buildings were home to Citigroup’s Smith Barney and Salomon Bros. Funds and Massachusetts Mutual Life Insurance Co.’s OppenheimerFunds. Deutsche Bank also had offices there.
Los Angeles-based Capital Group Cos. shut its five major U.S. offices, including an operation in Rockefeller Center three miles north of the World Trade Center, according to Investor News Service. The move was made for the “physical safety and mental well-being” of the company’s employees, a spokesman said.
Individual investors’ reaction to the attacks appeared to be restrained, several fund firms said.
Customer phone call volumes at Fidelity, Vanguard Group and other firms were surprisingly light, according to spokespersons.
“I suspect that a lot of people are simply watching TV,” Fidelity spokeswoman Anne Crowley said.
“Typically in market crises we’d expect to have management folks and people like me, who don’t normally handle calls, answering the phones to help out,” said Rebecca Cohen, spokeswoman for Valley Forge, Pa.-based Vanguard, the second-biggest fund company with nearly $500 billion in stock and bond fund assets. “Instead, we sent people home at 3 p.m. [EDT] rather than 5:30. We didn’t need a call to arms.”
At Strong Investments in Milwaukee, spokeswoman Jody Lowe said the firm took additional, unspecified security measures with its computer systems as a precaution, though no problems were reported.
Phone representatives and messages posted at several fund company Web sites explained to investors that any trades investors requested could not be processed until U.S. markets reopen.
At Janus Capital Corp. in Denver, its Web site said: “In light of recent events and the markets’ closure, any purchases, redemptions or exchanges placed [Tuesday] will be priced at the net asset value determined after the next New York Stock Exchange market close. It is unknown when the NYSE will next open for business.”
At Fidelity, investors were told that “market” orders (orders to buy and sell stock at any available price) would not be taken. “Limit” orders (orders issued to buy or sell only at a specific price or better) were taken but won’t be carried out until the market reopens, Crowley said.
Orders to buy or redeem mutual funds were taken and will be executed at “the next available price when the market reopens,” she said.
Strong did not take stock or fund trade requests online, Lowe said.
Possible damage to the financial system’s infrastructure is yet to be determined, noted Jon Burnham, chairman of Burnham Securities Inc. in midtown Manhattan and manager of the Burnham Fund.
“The concern is what damage, if any, has been done to the trading systems--all the phone lines and computers that process the transactions,” he said. “We just don’t know.”
