Disclosure is the order of the day. The Securities and Exchange Commission is putting in place a rule requiring mutual fund companies to start disclosing how they structure portfolio managers' compensation and to indicate managers' investments in the funds they oversee, The Wall Street Journal reports.
Specifically, the rule requires funds that launch after Feb. 28 to disclose the information in their registration documents. Existing funds must report the information in their prospectuses, which are updated annually. The SEC rule aims to better align managers' interests with those of long-term shareholders. For instance, potential conflicts of interest by portfolio managers can be identified if they disclose investments they have in their mutual funds and in hedge funds.