But SEC Secretary Jonathan Katz said the two products are not the same and should not be regulated under the same rules. Unlike mutual funds, folio products allow investors to make their own investment decisions independent of an investment advisor or portfolio manager. Furthermore, mutual funds pool investors' money in order to trade securities, folio products do not.

As for the ICI's concerns for investors' protection, the SEC, "is of course attentive to issues of investor protection. The Commission notes, in any event, that sponsors of portfolio investment programs generally are subject to regulation and oversight under other federal securities laws," Katz said in his letter.

In fact, folio investment programs must register with the SEC as broker/dealers and are subject to regulations under the Securities Exchange Act of 1934.

For its part, the ICI is disappointed with the SEC's decision but is not at this time planning to pursue the matter further, said Chris Wolszcyna, a spokesman with the ICI. "We felt we had a strong argument for our position," he said.

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