"Name Rule" requires that 80% of a fund's portfolio matches the asset advertised by its name.
"A fund’s investment portfolio should match a fund’s advertised investment focus," SEC chair Gary Gensler said on Wednesday at a meeting to vote on the rule. "Such truth in advertising promotes fund integrity on behalf of fund investors." The SEC since 2021 has also focused on prosecuting ESG-related misconduct and "greenwashing", bringingFinancial reform advocates say billions of dollars are now invested in popular funds that may actually support fossil fuel production and do not meet the ESG goals suggested by their names, which can change frequently.
The 80% investment requirement currently applies to other fund characteristics such as risk. As a result of the change, 76% of investment funds would be subject to the "Names Rule" up from the current 60%, SEC officials said prior to the vote.