What's In an (Investment Company) Name?
Posted by Lori Ehleben Jun 30, 2022 12:15:00 PM
The Securities and Exchange Commission has long enforced consistency between the name and strategy of a regulated investment company.
The original “Names Rule,” Rule 35d-1 of the Investment Company Act of 1940, was issued in 2001 and was intended to help ensure a fund’s name does not misrepresent the fund’s investments and risks to investors. It generally requires that if a fund’s name suggests a focus in a particular investment type, industry or geographic region, the fund must adopt a policy to invest at least 80% of its assets accordingly. Similarly, if the fund’s name suggests that its distributions are tax-exempt, for example, the investment policy must adhere to this claim.