Rachael Schwartz was quoted on how the Securities and Exchange Commission’s (SEC) fund-of-funds rule proposal could present challenges to fund-of-fund arrangements.
In a comment letter to the SEC, the Investment Company Institute (ICI) said that portfolio managers could have to consider any fund-of-funds holdings as illiquid. A fund owning 25 percent of an underlying fund — the maximum allowed — could need up to 10 months to completely unwind from that holding.
Rachael noted how this restriction seems arbitrary because “one of the benefits of investing in a registered open-end fund is it’s a redeemable, liquid investment.”
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