The Securities and Exchange Commission has put three new rules and one amendment in place regarding funds-of-funds. The new rules codify exemptions that the SEC has granted over the years for such funds, while the amendment is a new requirement.

Importantly, the amendment will require funds-of-funds as of Jan. 2 to provide in their fee tables the total fees they charge investors, that is, their own management fees plus the expenses of the funds in which they invest. Currently, the tables do not generally display the cumulative totals.

The first new rule allows funds-of-funds to sweep excess cash into money market funds without seeking the SEC's permission. The Commission is also granting greater flexibility with regards to such funds investing in funds in the same fund group.

Finally, funds-of-funds that invest small amounts in unaffiliated funds will have greater flexibility as to the way they structure their sales loads, although this rule does not allow them to increase the amount charged.

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