SEC IM Staff Issues Guidance Update on Disclosure Related to Current Market Conditions

March 29, 2016

The staff of the U.S. Securities and Exchange Commission Division of Investment Management (Staff) has issued an IM Guidance Update on fund disclosure regarding risks related to current market conditions (Guidance Update). Indicating that “[d]egree of risk is dynamic in nature rather than static,” the Guidance Update provides the Staff’s view that “undertaking [designated] steps on an ongoing basis should help [mutual funds, exchange-traded funds and other registered investment companies] in providing risk disclosures to investors that remain robust in changing market conditions.”

The Staff discussed two examples where updated disclosures “highlight current conditions in a manner that we believe can make risk disclosure more timely, more meaningful, and more complete” – (1) disclosures by fixed income funds with respect to interest rate, liquidity and duration risks; and (2) disclosures as to fund exposure to Puerto Rican debt securities.

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