The Securities and Exchange Commission said Thursday that it has launched a series of exam initiatives focused on mutual funds and exchange-traded funds.
The agency’s Office of Compliance Inspections and Examinations released a Risk Alert stating that the exams will focus on funds and/or advisors that fall into one or more of the following categories:
• Index funds that track custom-built indexes;
• Smaller ETFs and/or ETFs with little secondary market trading volume;
• Mutual funds with higher allocations to certain securitized assets;
• Funds with aberrational underperformance relative to their peer groups;
• Advisors relatively new to managing mutual funds; and
• Advisors who provide advice to both mutual funds and private funds that have similar strategies and/or are managed by the same portfolio managers.