The Securities and Exchange Commission proposed amendments to Rule 35d-1 under the Investment Company Act of 1940, the fund “Names Rule," including improving the 80% rule and creating new and enhanced disclosure and reporting requirements.
The proposed amendments to the Fund Names Rule by the SEC are directly relevant to PRI signatories.
- the proposed rule would expand the requirement for funds with certain names to adopt a policy to invest 80 percent of their assets in the investments suggested by that name to cover any fund names suggestion a focus in investments. This would include, among other things, ESG factors.
- the proposed rule introduced disclosure requirement for improved information to investors about how funds names track their investments. This would include fund prospectus disclosure that defines the terms used in a fund's name.
- Under the proposal, a fund that considers ESG factors alongside but not more centrally than other, non-ESG factors in its investment decisions would not be permitted to use ESG or similar terminology in its name.