They're not buying wind-up radios and canned food, or building concrete bunkers. But mutual fund firms are preparing to hunker down for the Y2K scare.
Morgan Stanley Dean Witter's
asset-management division have been told to scrap any year-end vacation plans, one portfolio manager says.
"They basically told everybody here that if you've made any plans to take any vacation between Dec. 15 and Jan. 15 to cancel them because you're not going to be going on vacation during that time," says the portfolio manager, who asked not to be named. "And if you were thinking of planning any, don't. It seems a little bit extreme to me."
The portfolio manager says one of the firm's fears is that Y2K-phobic investors will yank money out of mutual funds at a time of reduced liquidity.
Asked about the policy, a Morgan Stanley Dean Witter spokeswoman said the company isn't commenting on the Y2K issue.
"Maybe they are blowout scenarios," the portfolio manager says, "but you could definitely see a scenario happening where people start pulling money out, and then you try to sell the stock when there's no buyer. It's kind of a big negative."
That "big negative" is scrapping vacation plans at firms across the industry.
At investment-management firm
, employees have been asked "firmwide" not to take vacation for the last two weeks of the year, says Edward von der Linde, manager of the
Mid-Cap Value fund.
But he notes that the company is planning to move its offices from New York to Jersey City, N.J., during January, and that may have contributed to the vacation policy.
Von der Linde says Lord Abbett established a line of credit a few years ago in case a liquidity crisis ever reared its ugly head.
"Those lines of credit are not necessarily for Y2K, but for any contingency," von der Linde says. He's hoping the brokers who sell Lord Abbot's funds will act as a buffer to curb any fears investors might have.
"Hopefully they will persuade shareholders to take the long-term view," he says.
also is curtailing year-end vacations for employees of the Pittsburgh-based firm.
"We've been told that we shouldn't be taking any vacation during a four-to-six-week time frame in December and January," says Arthur J. Barry, portfolio manager of the firm's
Capital Appreciation fund. "We should be around just in case."
, the nation's largest mutual fund firm, there's no firmwide policy restricting vacations at year's end. Instead, that decision will be made by each department head, spokeswoman Jessica Catino says.
She says the firm has little reason to believe its customers will make a run on their funds. Y2K inquiries to Fidelity's army of phone representatives have been "nominal," she says, and there's "no hard data" to indicate investors are nervous about the issue. Aside from that, Fidelity funds are able to lend money to one another as well as maintain cash levels of 3% to 7% of assets. That's a lot of cash for a firm that has $848 billion in assets under management.
"We have real-time access to cash positions in each of our funds, literally, minute by minute throughout the day," Catino says. "That's no different today than it will be on Jan. 1 or than it was five years ago."
in Malvern, Pa., preparations for Y2K have been taking place since 1996 -- as they have at many fund firms.
Vanguard has the literature to prove it. If there were a program to accompany the show at the end of the world, Vanguard has surely produced it. In a full-color, glossy brochure, the fund firm outlines its day-by-day plans for year's end.
For Dec. 31, the brochure promises that "through the weekend, Vanguard monitors phones, water, electricity and transportation systems for any sign of infrastructure problems as the New Year crosses the globe's time zones."
Need more proof that the firm is taking Y2K seriously? Vanguard says its senior management will also be on duty throughout the holidays.
Invesco Funds Group
in Denver, vacation plans are being postponed as well. But the firm has offered key personnel a bonus for sticking it out when the clock strikes 12.
"If mission-critical people postpone their vacation for a two-month period around the holidays, they'll get an extra week of vacation during the rest of the year," spokeswoman Laura Parsons says.
Maybe that's an idea the rest of the industry will embrace as well. But one thing's for sure: With high-priced portfolio managers working the holidays, maybe it really is the end of the world as we know it.