Presenting performance under the SEC Marketing Rule
Gross and net side by side, consistent calculations, and records you can produce on request.
What does the SEC Marketing Rule require for performance?
Rule 206(4)-1 under the Advisers Act requires advisers that show gross performance in an advertisement to show net performance with at least equal prominence, calculated over the same period and using the same methodology, and imposes conditions on extracted, hypothetical and predecessor performance. Advisers must keep records supporting the performance they present.
Gross and net, together
If a pitch book shows gross IRR, it must show net IRR alongside it with equal prominence. That means net returns must be calculable for the same period and method — straightforward when both come from the same ledger cash flows.
Extracted and hypothetical performance
Showing a subset of deals or a hypothetical track record carries extra conditions and policy requirements. Advisers generally present the total portfolio alongside any extract.
Consistency and records
The easiest way to comply is to compute performance one way, from one source, and keep the calculation. Performance that is rebuilt in a slide deck each fundraise invites inconsistency.
Questions
Does the rule apply to materials sent only to existing investors?
It depends on the communication; consult counsel.
Does FUN/D provide compliance advice?
No. It provides consistent calculations and records.
Related reading
Fund performance analytics · Regulatory compliance software for fund managers · IRR
Want to see this on your own fund?
Name and work email. A person replies within one business day, usually with times for a demo on a structure like yours.
Talk to us
Name and work email. We reply within one business day, from a person.
Sent.
Someone from FUN/D will email you within one business day. If it's urgent, call +1-212-658-0862.