Mutual funds can now hide BDC fees from investors—legally.

What it does

This bill allows registered investment companies (mutual funds, ETFs, closed-end funds) to exclude fees they pay to business development companies (BDCs) from their disclosed 'Acquired Fund Fees and Expenses' when reporting to the SEC. In practice, this lets fund managers show lower total fees to investors by hiding the cost of investing in BDCs, even though those costs are real and ultimately borne by fund shareholders.

Why we flagged it

The bill's operative mechanism is to permit the omission of real fees from investor-facing disclosures. It does not eliminate the fees themselves—only the requirement to report them transparently. This is a disclosure carve-out that benefits fund managers and BDCs at the expense of investor clarity.

What the text implies

• Investors will see lower headline fee figures in fund prospectuses, but the actual cost of their investment remains unchanged—the BDC fees are still paid, just hidden from the fee table. This creates a 'fee illusion' that may mislead retail investors comparing fund costs.
• The bill applies to all registered investment companies (mutual funds, ETFs, closed-end funds) investing in BDCs, potentially affecting millions of retail investors whose fund holdings include BDC exposure without their knowledge of the true fee burden.
• BDCs—which are often less liquid, higher-risk vehicles—become less visible in fund fee disclosures, potentially obscuring concentration risk and illiquidity exposure from retail investors.
• The SEC's existing fee-table rules were designed to give investors a clear, standardized way to compare fund costs. This carve-out fragments that transparency, making cross-fund comparison harder for retail investors.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Ordinary investors in mutual funds and ETFs will see artificially lower fee disclosures, obscuring the true cost of their investments. Fund managers and BDCs benefit from reduced transparency, while retail investors lose clarity needed to compare fund costs and make informed decisions.

Who stands to gain

• registered investment companies (mutual funds, ETFs, closed-end funds)
• business development companies (BDCs)
• fund managers and advisers

Named in the bill

Securities and Exchange Commission (SEC), registered investment companies, business development companies (BDCs), Investment Company Act of 1940, Form N-1A, Form N-2, Form N-3

Where it stands

25 cosponsors: 16 Democrats, 9 Republicans.

• Mar 18, 2025 — Introduced · Congress.gov: “Introduced in House”
• Mar 18, 2025 — Referred to House Committee on Financial Services and Senate Committee on Banking, Housing, and Urban Affairs · Congress.gov: “Referred to the House Committee on Financial Services”
• May 20, 2025 — Markup held in committee · Congress.gov: “Committee Consideration and Mark-up Session Held”
• May 20, 2025 — Reported out of committee · Congress.gov: “Ordered to be Reported (Amended) by Voice Vote”
• Jun 23, 2025 — Passed the House · Congress.gov: “On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote. (text: CR H2868)”
• Jun 23, 2025 — Floor vote scheduled · Congress.gov: “Mrs. Wagner moved to suspend the rules and pass the bill, as amended”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

11 lobbying clients named this bill on 20 disclosure filings across 3 quarters, Dec 2025 to Jun 2026. Those filings disclosed $63,060,770 in lobbying spend. A filing names 4 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 92% of bills with at least one filing.

Brad Sherman, the sponsor, reported $777,000 in PAC receipts in the 2026 cycle.

• Chamber of Commerce of the U.S.A. — $54,660,000 on 3 filings
• Securities Industry and Financial Markets Association — $5,090,000 on 2 filings
• American Investment Council F/k/a Pegcc — $1,614,260 on 2 filings
• Investment Company Institute — $916,510 on 1 filing
• Future Standard — $260,000 on 2 filings

Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.