Q&A For Common Marketing Rule Performance Calculation Questions

Many private fund advisers are struggling to develop a process for calculating net returns at the investment level in their marketing materials. We’ve put together responses for some of the most common questions we get asked to help your firm meet the requirements of the Marketing Rule. 

Our Q&A includes responses to: 

• Fees and expenses are charged at the fund level. What methodology should be used to allocate fees? 
• What are my peers doing? 
• How do I calculate investment-level returns net of actual fees? 
• How do I calculate investment-level returns net of model fees? 
• Is there an easier way? 

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How we help

ACA is the only governance, risk, and compliance (GRC) firm that offers both compliance and performance expertise, including a deep understanding of the intricacies of complex performance calculation methodologies, such as the ones outlined in this blog post. This issue is one that is causing a great deal of questions in the industry as firms look to make this substantive change in light of the new rule. ACA is assisting firms with this change in many ways, including: 

• Providing consulting to assist in understanding options for how to calculate the net return (including helping firms to assess whether the actual fee or model fee approach makes the most sense for their firm). 
• Once the net return is calculated, reviewing the calculation to ensure the methodology was applied consistently and in line with the SEC Marketing Rule and industry best practice. 
• Assisting the firm with documenting the policies and procedures associated with the chosen calculation methodology and ensuring the methodology is appropriately disclosed. 

We would be happy to speak with your firm to provide assistance on this component of the new rule, or any other area of your compliance program, as it pertains to the SEC marketing rule. Contact us here to learn more.