The SEC has announced a six-month extension of the compliance dates for amendments to the Investment Company Act Names Rule, which addresses fund names likely to mislead investors about a fund’s investments and risks.

That means the compliance date for larger fund groups has been extended from December 11, 2025, to June 11, 2026, and the compliance date for smaller fund groups (fund groups with net assets of less than $1 billion) is extended from June 11, 2026, to December 11, 2026.

The SEC said the extension is designed to balance the investor benefit of the amended Names Rule framework with funds’ needs for additional time to implement the amendments properly, to develop and finalize their compliance systems, and to test their compliance plans.

To help funds avoid additional costs when coming into operational compliance with the Names Rule amendments, the SEC also said it aligned the compliance dates with the timing of certain annual disclosure and reporting obligations that are tied to the end of a fund’s fiscal year.

Amendments adopted in 2023

The amendments to the Names Rule require more funds to invest at least 80% of the value of their assets in those investments suggested by the fund’s title. This includes funds that use terms such as “growth” or “value,” or terms that reference a thematic investment focus, such as the incorporation of one or more environmental, social, or governance factors.

There are also enhanced prospectus disclosure requirements for terminology used in fund names, and a requirement that any terms used in the fund’s name that suggest an investment focus must be consistent with those terms’ plain English meaning or established industry use.

Additional reporting and recordkeeping requirements for funds regarding compliance with the names-related regulatory requirements are also included.

And there is a new requirement that a fund review its portfolio assets’ treatment under its 80% investment policy at least quarterly. This will include specific timeframes – generally 90 days – for re-establishing compliance with the rule if a fund departs from its 80% investment policy.

Commissioner Hester Peirce had supported the rule amendments in September 2023, largely because the new rule’s adopting release clearly gives fund managers the authority to define the terms used in the funds’ names themselves.

But then-Commissioner (and now Acting Chair) Mark Uyeda dissented, saying the release provides little guidance on what is meant by “particular characteristics,” such that practically any term could be subject to the Names Rule. “If we wanted all funds subject to the names rule, we should have simply said so,” Uyeda said.