The growing trend among US mutual funds of investing in private companies has raised concerns, leading the SEC to question mutual funds over how they value companies such as Uber and Airbnb. Many are young companies that have yet to make a profit. In a letter sent on Monday to all fund managers, the Securities and Exchange Commission (SEC) said that while it was not aware of any specific cases where investors had been hurt by investments made through these funds, However, holdings in private companies could hurt investors in a downturn if managers are forced to sell assets to meet redemptions, according to Larry Swedroe, direct of research at Buckingham Asset Management.
The growing trend among US mutual funds of investing in private companies has raised concerns, leading the SEC to question mutual funds over how they value companies such as Uber and Airbnb. In a letter sent on Monday to all fund managers, the Securities and Exchange Commission (SEC) said that while it was not aware of any specific cases where investors had been hurt by investments made through these funds, However, holdings in private companies could hurt investors in a downturn if managers are forced to sell assets to meet redemptions, according to Larry Swedroe, direct of research at Buckingham Asset Management.