Mutual Funds and Retirement Plans

Question 1

If a covered member or a person who can influence the engagement team, they may have a direct or indirect interest. What are the rules?

Answer 1

• Interest in the fund itself is DIRECT
• Interest in underlying investments if own less than or equal to 5% of diversified fund INDIRECT
• If a CM owns more than 5% or an undiversified fund, then they must evaluate the fund’s underlying investments to determine whether their indirect financial interest in any of the underlying investments is material.

Question 2

When are retirement plans a direct interest?

Answer 2

When you have the ability to supervise or participate in the plans, even if material.

This includes family members of covered members.

If they don’t self direct or supervise or participate in investment, the underlying investments are indirect. Immaterial investment would not be a problem.