SEC Adopts Changes to Fund Names Rule

The SEC has adopted amendments to the Investment Company Act Names Rule, which addresses fund names. A fund’s name is typically the first piece of information that investors receive about a fund. Fund names offer important signaling for investors in assessing their investment options.

About the Amendments

The amendments are designed to ensure a fund’s portfolio aligns with its name. Specifically, the new rule would require that more funds adopt an 80% investment policy, which is a practice by which 80% of a fund’s investments conform to a fund’s thematic name, such as “growth” or “value.” The requirement previously only applied to registered investment companies.

The amendments also require a fund perform a quarterly review of its assets to ensure compliance with its 80% investment policy, with a further requirement that any necessary changes to conform to the policy be completed within a specified time frame.

The amendments will include enhanced disclosure requirements over terminology used in fund names, particularly related to alignment with industry standard and plain English meanings. Additional reporting, and recordkeeping requirements regarding compliance with the Names Rule are also included in the amendments.

Transition Period and Compliance Date

The amendments provide for a 24-month transition period following the rules’ effective date, which would be 60 days after the date of publication of the final rules in the Federal Register for fund groups with more than $1 billion in net assets. The amendments allow a 30-month transition period for advisers with less than $1 billion of net assets.

We’re Here to Help

To learn more about the proposed amendments, or the potential impacts on your business, contact your Moss Adams professional.

Additional Resources

Contact Us with Questions

Enter security code:
 Security code