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This bill allows certain BDC-related indirect fees to be excluded from funds' disclosed AFFE, which can make funds look cheaper and potentially boost competition, but does so at the cost of reduced fee transparency and weaker oversight—making it harder for investors and regulators to understand and compare true costs.
Middle-class retail investors may see lower reported expense ratios for some funds because BDC-related indirect fees can be excluded from Acquired Fund Fees and Expenses, which could make those funds appear cheaper and increase competition and investor choices.
Registered investment companies and related financial institutions can present lower AFFE figures by excluding BDC-related indirect fees, improving the marketability of certain fund products and potentially reducing reporting complexity for fund managers.
Investors (especially middle-class families and taxpayers) will receive less transparent information about the true indirect fees they pay because BDC-related costs can be omitted from the Fee Table Disclosure, undermining informed decision-making.
Weaker fee disclosure will make it harder for investors to compare funds accurately and may increase the risk that investors pay higher net costs or choose poorer-performing products based on incomplete fee information.
Reducing the scope of fee reporting weakens regulatory oversight and makes it harder for the SEC and market participants to monitor fund fee practices, increasing the chance of inconsistent or obscure fee treatment across funds.
Based on analysis of 2 sections of legislative text.
Allows registered investment companies to exclude fees from investments in BDCs when calculating Acquired Fund Fees and Expenses shown in fee tables.
Official title: To permit a registered investment company to omit certain fees from the calculation of Acquired Fund Fees and Expenses, and for other purposes.
Introduced March 18, 2025 by Brad Sherman · Last progress June 24, 2025
Allows registered investment companies to omit certain indirect fees tied to investments in business development companies (BDCs) from the “Acquired Fund Fees and Expenses” line in their Fee Table Disclosures on SEC forms. The change narrows what must be included in the fee calculation for investor-facing disclosure tables, affecting how some fund fees are presented to investors.