Marketing Rule Guidance Expected by the Industry | Will Clark Insights
VIGILANT INSIGHTS
Introduction
Early on at the Investment Adviser Association (IAA) Conference, there was chatter that later in the Conference did indeed lead led to hints by some SEC Staff on the Conference Stage that they are hopeful Marketing Rule guidance will be released shortly.
Two new FAQs are expected to be released, offering relief on some of the more complex aspects of the Rule surrounding yield and extracted performance.
Vigilant Director, Will Clark, CIPM, MBA, who has over 15 years of experience with Investment Performance attended the Conference and provided his thoughts on FundFire regarding the buzz around the anticipated Marketing Rule guidance.
Will Clark Insights
It is expected that the new guidance would seek to address compliance challenges that stemmed from the Marketing Rule FAQ released on January 11th, 2023.
Will stated on FundFire that the industry is expecting the SEC to provide updated guidance stating that dividend yields – which had been a gray area in the rule – will no longer be considered performance advertising but a portfolio characteristic.
Additionally, Will said that the SEC is also expected to grant relief by stating that Firms will no longer have to include net performance calculations when showing the results of a subset of investments from a portfolio, known as extracted performance, as long as both the gross and net performance of the entire portfolio is shown prominently in the ad. Extracted performance has been one of the biggest compliance challenges with the Marketing Rule and this would help provide clarity.
It was emphasized by Will that the provision has been a “pain point” for the industry, particularly for Private Fund Managers looking to highlight performance at the underlying investment level, such as for specific properties or deals. He stressed that having to show net at the investment level and maintaining a separate set of records just for the performance that is not going to tie into anything takes a lot of time and that creating this number is not useful.
Vigilant’s Conclusion
As Vigilant attended the Conference in person, there was a sense of optimism, excitement and relief to hear that Marketing Rule guidance and updated FAQs could be on the horizon, as soon as this week (Week of March 10th, 2025). Stay tuned for additional updates from Vigilant, should this expected guidance be released by the SEC.
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