In a move designed to help fund managers explain some of the tracking error their funds seem to experience, MSCI Inc., is providing fair value adjusted pricing for its global equity indices.

The firm announced Tuesday that it has entered into an arrangement with Interactive Data Corp. to provide fair value adjusted index data; which, it says, will make it easier for mutual fund managers, pension managers, ands others, to explain the tracking error caused by fair valuing their international and global funds.

MSCI says that it will provide fair value adjusted index data for the main indices that comprise its various global equity index families. The adjusted indices are calculated using fair value prices as of the close of the New York Stock Exchange (NYSE), which are provided by Interactive Data’s Fair Value Information Service.

“Managers of active international mutual funds have struggled to explain funds’ tracking error versus their benchmarks caused by fair value portfolio pricing,” said Diana Tidd, managing director and head of the MSCI index business in the Americas. “This agreement brings together two industry leaders to create a simple tool to help understand the impact of fair value pricing on funds.”

“The collaboration between MSCI and Interactive Data represents a milestone for the mutual fund industry, where systematic fair valuation for global equities has been a near universal practice among funds for several years now,” said Andrew Hausman, president, pricing & reference data for Interactive Data.

“We expect that the MSCI Indexes with IDCo Fair Value Pricing will serve as an important reference tool for understanding valuation differences that may arise between the fund and its benchmark, and also provide investors with an additional reference point to form their opinions of value and support important trading decisions,” he added.