The naming of funds: SEC staff updates Names Rule guidance

In January 2025, the SEC staff of the Division of Investment Management (Staff) published an FAQ that addressed several interpretive questions regarding the 2023 Names Rule amendments (January FAQs). The January FAQs are discussed in more detail in our prior alert, SEC Releases 2025 Names Rule FAQ. Shortly thereafter, in March 2025, the SEC pushed back the compliance dates for the amended Names Rule—for larger fund groups the compliance date was extended from December 11, 2025, to June 11, 2026, and the compliance date for smaller fund groups was extended from June 11, 2026, to December 11, 2026.¹

With the new compliance dates quickly approaching, the Staff released additional FAQs on February 18, 2026. These FAQs supplement the January FAQs and address open interpretive questions. On the same day, the SEC proposed amendments to Form N-PORT and extended the compliance dates for Names Rule-related N-PORT reporting requirements.

The February 2026 FAQs

60-Day Shareholder Notice Not Required for Certain Non-Material Policy Changes (FAQ #2)

The Staff stated that it would not object if a fund did not provide 60-day notice to shareholders of non-material changes to an existing non-fundamental 80% investment policy that are made solely to comply with the amended Names Rule. The Staff also extended this position to changes that make the policy more stringent, consistent with the fund’s current strategy in light of the name’s treatment under the amended rule. 

For example, a large-cap growth fund amending its existing 80% investment policy to include growth investments as part of the policy would fall within this guidance. The Staff reasoned that these types of non-material changes to an 80% investment policy do not implicate the Staff’s concern that shareholders would not have sufficient time to redeem their shares in the event that a fund pursues a different investment policy.

Cash Held for Unfunded Commitments May Count Toward the 80% Basket (FAQ #3)

The Staff addressed a question relevant to funds that enter into unfunded commitments when making investments into private funds or special purpose vehicles (Portfolio Funds). Such funds may hold a significant portion of their assets in cash and cash equivalents to cover these unfunded commitments. The Staff stated that a fund may count such cash and cash equivalents toward its 80% basket, provided that:

(1) the Portfolio Funds are or will be included in the fund’s 80% basket; and 
(2) the fund reasonably expects the commitments to be called in the future. 

The Staff indicated that a fund relying on this treatment should include explanatory disclosure regarding its intention to take this approach in its registration statement.

Treatment of “Growth” and “Value” When Paired with Modifying Terms (FAQ #10)

Under the amended Names Rule, the terms “growth” and “value” are identified as terms that would require a fund to adopt an 80% investment policy.² However, the Staff acknowledged limited cases where these terms, when paired with other modifying terms, do not trigger this requirement. For example, when “growth” or “value” is combined with a term that clearly indicates that “growth” or “value” investments are not the predominant component of the fund’s portfolio, no 80% policy is required. The Staff cited the example of a fund using both “income” and “growth” in its name, noting that this combination generally indicates the fund seeks a portfolio-wide outcome of growth of capital along with current income, rather than a focus on growth investments.

“Merger” and “Merger Arbitrage” Do Not Require an 80% Investment Policy (FAQ #11)

The Staff stated that fund names including “merger” or “merger arbitrage” do not trigger the 80% investment policy requirement. The Staff noted that funds using these terms generally pursue a strategy that seeks returns from inefficiencies in asset pricing that may occur before or after mergers or other types of reorganization events. In the Staff’s view, these terms suggest an investment technique or a portfolio-wide result to be achieved, rather than communicating to investors the particular characteristics of the investments that will make up the fund’s portfolio.

Form N-PORT Developments

Concurrently with the release of the new FAQs, the SEC proposed amendments to Form N-PORT that would modify certain reporting requirements adopted in 2024 (2024 Amendments).³

The proposed amendments, if adopted, would: 

1. Retain the monthly filing requirement for Form N-PORT, but allow funds 45 days after month-end to file reports, rather than 30 days as was required under the 2024 Amendments.
2. Revert to the pre-2024 Amendments publication frequency, meaning that only information reported for the third month of a fund’s fiscal quarter would be made publicly available, 60 days after quarter-end. Under the 2024 Amendments, information reported for each month would be made publicly available 60 days after month-end.
3. Modify the information reported on Form N-PORT, including narrowing the scope of certain reporting metrics and eliminating the requirement to report on Names Rule compliance. 

In connection with the proposed N-PORT amendments, the SEC separately extended the compliance dates for the Names Rule-related N-PORT reporting requirements.⁴ The new compliance dates for the Names Rule-related N-PORT reporting requirements are November 17, 2027, for fund groups with $10 billion or more in net assets and May 18, 2028, for fund groups with less than $10 billion in net assets. The extension is intended to provide additional time for funds and the SEC to consider the proposed amendments to Form N-PORT related to Names Rule compliance reporting.

Additional Information

For additional information regarding the Names Rule, please see our other alerts: SEC Expands the Names Rule, October 2, 2023 and SEC Releases 2025 Names Rule FAQ, January 30, 2025 

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

_{1 Press Release, SEC Extends Compliance Dates for Amendments to Investment Company Names Rule (Mar. 14, 2025), available at https://www.sec.gov/newsroom/press-releases/2025-54.
2 See Rule 35d-1(a)(2) under the Investment Company Act of 1940.
3 Form N-PORT and Form N-CEN Reporting; Guidance on Open-End Fund Liquidity Risk Management Programs, Investment Company Act Release No. 35308 (Aug. 28, 2024), available at https://www.sec.gov/files/rules/final/2024/ic-35308.pdf.
4 Investment Company Names Form N-PORT Reporting; Extension of Compliance Date, Investment Company Act Release No. 35963 (Feb. 18, 2026), available at https://www.sec.gov/files/rules/final/2026/ic-35963.pdf.}