Investment funds get permission to hide fees from investors
S. 1808 — Access to Small Business Investor Capital Act · Filed by Dave McCormick (R-PA) · 17 cosponsors · Introduced May 20, 2025 · Referred to committee
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What it does
This bill allows registered investment companies (mutual funds, closed-end funds, etc.) to exclude certain fees they pay indirectly when investing in business development companies (BDCs) from their disclosed 'acquired fund fees and expenses' on regulatory forms. In practice, this lets investment funds hide a category of costs from investors who rely on fee disclosures to compare fund performance and expenses.
Why we flagged it
The bill's operative mechanism is a narrow exemption from SEC fee-disclosure rules that benefits investment fund managers by allowing them to present lower stated expenses to investors. It is not a broad deregulation but a targeted carve-out for a specific fee category.
What the text implies
- Investors comparing funds using the standard fee table will see artificially lower expense ratios for funds that invest in BDCs, making those funds appear cheaper than they actually are relative to competitors.
- The omitted fees still exist and are still paid by investors indirectly; they are simply removed from the standardized disclosure that regulators and the industry use to ensure comparability.
The full analysis lists 4 implications of this text.
Who stands to gain
registered investment companies (mutual funds, closed-end funds); business development companies (BDCs); fund managers and advisors (lower disclosed fees improve marketing and competitiveness)