SEC Proposes to Enhance Private Fund Marketing

Matt Deatherage, CFA, CIPM

March 9, 2022

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Recently we have observed numerous trends in the investment industry for a higher level of transparency and more standardized reporting from investment managers. To name a few, the SEC is pushing for more comprehensive advertising requirements with the Modernized Marketing Rule for Investment Advisors and FINRA with rule 2210 for Communications with the Public for Fund Managers. The most recent proposed update for standardized performance reporting has come from the SEC in a series of amendments aiming to enhance private fund reporting.

Liquid Fund Performance:

A liquid fund, defined as “any private fund that seeks to generate income by investing in a portfolio of short-term obligations in order to maintain a stable net asset value per unit or minimize principal volatility for investors,” is required to present annual total investment returns on a net basis since the inception of the fund. In addition to the annual net return requirements, the proposal also requires the presentation of annualized net returns covering a one-, five-, and ten-year period (as well as since-inception if the fund has not been in existence for any of the stated time periods required). An additional metric the proposal is pushing for is the cumulative return through the most recent period end (defined as the most recent quarter-end), net-of-fees.

Illiquid Fund Performance:

An illiquid fund, which is defined as “any fund investing in securities that cannot be sold or disposed of in the ordinary course of business within seven calendar days at approximately the value ascribed to it by the fund,” is required to present a series of money-weighted return statistics (e.g., Internal Rate of Return (“IRR”)). These statistics include the gross and net since-inception money-weighted return and the gross invested capital multiple (also known as the “MOIC”) as of the most recent calendar quarter-end, without the impact of any subscription lines of credit used.


Both liquid and illiquid funds will be expected to include robust disclosures regarding the adopted calculation methodology and any assumptions made in the calculation of presented statistics. In addition to the criteria being used, illiquid funds will be expected to include prominent disclosures regarding the contributions and withdrawals to and from fund investors, as well as the fund’s current net asset value. Outside of calculation methodologies, the SEC is proposing detailed disclosures to be required outlining any and all applicable fees and expenses that have been, and are expected to be, incurred in the management of the fund. These proposed disclosures would be in addition to existing required SEC disclosures.

Comment Period:

These proposed rules are not yet finalized. The public comment period will remain open for 60 days proceeding the release on these proposed rules amendments (which was released in February 2022). Once the comment period concludes, the SEC will consider feedback provided and finalize the new amendments. For more information on this recent press release, and the proposed amendments to the rule, see the full press release here.

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Longs Peak is a consulting firm specialized in helping investment firms and asset owners calculate and present investment performance. If you need assistance preparing for any of these new proposed rules, please contact us at or visit our website at