man calculates money. piggy bank and business documents on desk

Fund managers will have to step up their disclosure of mutual fund and ETF fees and expenses, under new rules adopted by the U.S. Securities and Exchange Commission (SEC).

On Wednesday, the SEC voted to require more effective reporting that highlights fund costs, performance and portfolio holdings; and demands greater fee transparency in fund advertising.

Current investment fund reports often run to over 100 pages, making it difficult for investors to access critical information on fund costs and performance, SEC chair Gary Gensler noted in a statement.

“Today’s final rules will require fund companies to share a concise set of materials that get to the heart of the matter,” Gensler said.

While the new requirements will streamline the amount of information provided in these reports, funds will be required to make more detailed data accessible online, for free.

At the same time, the regulator also adopted changes to the rules on fund advertising that require consistency in fee transparency between funds’ prospectuses and their sales and marketing materials.

The new fund advertising requirements aim to “promote transparent and balanced presentations of fees and expenses,” Gensler said.

The rule changes, which become effective in 60 days, allow for an 18-month transition period to give firms time to comply with the new requirements.

Additionally, the SEC also proposed rule changes that require investment advisers to meet standards for due diligence and monitoring when outsourcing certain functions.

“Though investment advisers have used third-party service providers for decades, their increasing use has led staff to make several recommendations to ensure advisers that use them continue to meet their obligations to the investing public,” Gensler said.

“When an investment adviser outsources work to third parties, it may lower the adviser’s costs, but it does not change an adviser’s core obligations to its clients. Thus, today’s proposal specifies requirements for investment advisers designed to ensure that advisers’ outsourcing is consistent with their obligations to clients,” he added.

The proposals are out for a 60-day comment period.