Modernizes the 80% investment policy requirement:
- Expands the scope to apply to any fund names that include terms suggesting the fund focuses on investments that have, or whose issuers have, particular characteristics (feature, quality, or attribute) – e.g. ESG, sustainable, green, value, growth, artificial intelligence.
- Requires investments selected to have a meaningful connection with the fund’s suggested focus, such as an industry affiliation or source of revenue.
- Requires at least quarterly checks that the fund complies with its defined 80% investment policy.
- Specifies circumstances in which a fund may temporarily depart from its 80% investment policy, generally requiring a fund to come back into compliance within 90 days. This is a change from the 30-day period to return to compliance that was in the proposal.
- Requires a fund to use a derivative instrument’s notional amount, rather than its market value, for purposes of determining the fund’s compliance with the 80% investment policy requirement.
- Generally prohibits a closed-end fund or business development company that is not listed on a national exchange from changing its 80% investment policy without shareholder approval, subject to certain exceptions.