Office of the Investor Advocate Releases Research Study on Fund Performance Benchmarks

Researchers from the SEC’s Office of the Investor Advocate (OIAD) released an independent research study examining the impact of mutual fund performance benchmarks on investor decision-making, and potential strategic behavior by firms in displaying benchmarks. This study examines market data and the results of a large behavioral experiment to understand how funds employ benchmarks and how investors respond to benchmark presentation.

The research study was published on the OIAD website and has been placed in the comment file (No. S7-09-20) for a rulemaking package that would, among other things, modernize open-end fund shareholder reports. The proposal, which was proposed by the Commission in August 2020, features concise and visually engaging shareholder reports that would highlight information that is particularly important for retail investors to assess and monitor their fund investments.

Analysis in the research study may be informative for evaluating comments on the proposed requirements for funds’ performance disclosure. The authors are making this analysis available to allow the public to consider this supplemental information.  Comments on this supplemental information may be submitted to the comment file (File No. S7-09-20) for the proposal.

OIAD was established by Congress in 2014 as an independent office within the SEC. The Office provides a voice for investors as decisions are made at the SEC.