email rounding up the latestUS financial watchdogs are pushing ahead with a crackdown on deceptive fund names, despite industry warnings that it will discourage stock picking, violate free speech protections and force funds to sell assets at a loss when markets are volatile.
“The names rule is a core investor protection disclosure rule that seeks to ensure that investors are not misled by the labels attached to funds. It’s overdue for an update,” said Stephen Hall, legal director of Better Markets, which lobbies for increased investor protection. “Investors often rely on a fund’s name when making investment decisions.”
Chanda added: “If you take the ESG parts of the proposal out . . . a lot of the things that they’re doing in the context of the rule more broadly are somewhat a solution in search of a problem.” The industry is particularly concerned about applying the 80 per cent rule to “growth” and “value” funds, because different companies define those strategies differently, and to “global” funds, because some funds that are currently described as global have up to 60 per cent of their holdings in the US.