When the SEC Marketing Rule was released in December 2020, decades of outdated rules and guidance were replaced with an attempt at more evergreen regulation, envisioned to better accommodate future market changes and not require substantial no-action relief to address uncertainties. Yet, uncertainty remained within those 430 pages, and one such uncertain item was the treatment of performance attribution.
An FAQ issued on January 11 of this year left little doubt that the SEC intended for performance to be shown on a net basis, whether for all or a subset of investments. Further statements made by SEC staff since the FAQ release have clarified treatment of most forms of performance analysis commonly termed as attribution, some of which are in scope and some not. For those in scope, SEC-registered investment advisers must present performance as net, even if the investments depicted do not directly incur fees in the real world. Manufacturing net can be tricky, and no methodologies have been offered by the SEC. However, CFA Institute has worked to address this void, developing a framework for calculating net sector performance, net contribution, and net investment-level returns by applying a model fee to time-weighted returns.   CFA Institute is also working to create a model for calculating net deal level internal rates of return (IRRs).

On May 2, please join AIMA, the Investment Adviser Association (IAA), and CFA Institute for a webinar on the net performance issue. During this session, we will take an in-depth look at the CFA Institute’s framework, which may help those seeking a consensus approach. Attendee questions are welcome and encouraged.

Whether your firm has settled on an approach to calculating net or continues to grapple with this issue, we hope you will join us. 

Panelists:
•    Sanjay Lamba, Associate General Counsel, Investment Adviser Association
•    Suzan Rose, Senior Advisor, Government & Regulatory Affairs, AIMA
•    Karyn Vincent, Senior Head, Global Industry Standards, CFA Institute

In partnership: