Features of evaluation of blocked securities in closed mutual investment funds

The article demonstrates the results of a study of the methodology for evaluating blocked foreign securities (securities transferred to non-trading accounts) as part of exchange-traded mutual funds and closed-end mutual funds, as well as an analysis of the evaluation reports of some funds of Russian licensed management companies. The study revealed that appraisers set the fair value of blocked assets at a discount to the exchange price of the relevant securities freely traded on the stock exchange. The authors point out that investors holding fund units are at a disadvantage because of the lack of exchange trading and the valuation of blocked foreign assets in funds at a non-zero value, since fund commissions (including remuneration to the management company) can be calculated based on the value of the fund’s net assets.