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Mutual Fund Firms Scurry to Warn Investors of Pandemic Risks (1)

March 26, 2020, 8:16 PM

Here’s a sign of the times: Money managers are hastening to warn investors about the potential financial impact of a pandemic.

More than 40 asset managers, including Baron Capital Management and Neuberger Berman Group, have updated their shareholder prospectuses to include such risks in U.S. Securities and Exchange Commission filings. Most are using similar language, stating that pandemics are among a range of potential hazards for investors, though some statements are more comprehensive than others.

“Unexpected local, regional or global events and their aftermath, such as war; acts of terrorism; financial, political or social disruptions; natural, environmental or man-made disasters; the spread of infectious illnesses or other public health issues; recessions and depressions; or other tragedies, catastrophes and events could have a significant impact on the Fund and its investments,” the Catalyst Funds said in a filing earlier today.

While several firms took this step as early as February, the trend accelerated on March 13, a day after the S&P 500 Index fell about 9.5%. Wasatch Advisors, a Salt Lake City firm with about $19.9 billion under management at the end of February, made its filing on March 24.

The SEC has been contacting fund companies on the issue, said Steve Rung, a Wasatch spokesman. The agency prefers that fund managers update principal risk disclosures in real time, he said.

“This is something that occurred that probably most people hadn’t anticipated in the past,” Rung said in a telephone interview. “Now we are saying this is a risk that should be enumerated because now we know about it.”

(Adds example of mutual fund risk factor in third paragraph)

To contact the reporter on this story:
Miles Weiss in Washington at

To contact the editors responsible for this story:
Sam Mamudi at

Alan Mirabella, Melissa Karsh

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