SEC Proposes Performance Fee Changes and Expanded Investor Access
The U.S. Securities and Exchange Commission proposed rules allowing mutual fund managers to charge one-sided performance fees and expanding retail access to private funds.
The United States Securities and Exchange Commission released proposed rules that would allow mutual fund managers to implement one-sided performance fee structures. These structures, common in private funds, would enable managers to charge higher fees for positive performance without facing penalties for poor results, with fees potentially based on unrealized paper gains.
Chairman Paul Atkins is leading the agency in a broader effort to increase retail investor access to private equity and private credit funds. The SEC seeks to expand the definition of accredited investors to include individuals with specific finance-related credentials, regardless of their total financial resources.
The proposals also include operational flexibility for semi-liquid vehicles, such as extending the buffer period required before a fund must make its initial repurchase offer. Critics of the plan argue these changes will expose retail investors to increased volatility, riskier illiquid assets, and higher overall fees.
