Do SEC regulations require funds of funds to include in the expense ratio of the parent fund the weighted sum of the expense ratios of the holdings?
<p>I have <a href="https://redd.it/ktocav" rel="nofollow noreferrer">read</a>:</p>
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<p>I believe SEC regulations also require a &quot;fund of funds&quot; to publish the expense ratio of the parent fund to include the weighted sum of the net expense ratios of the holdings.</p>
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<p>Do SEC regulations require a &quot;fund of funds&quot; to publish the expense ratio of the parent fund to include the weighted sum of the net expense ratios of the holdings?</p>
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<p>For example, <a href="https://investor.vanguard.com/mutual-funds/profile/VFIFX" rel="nofollow noreferrer">Vanguard Target Retirement 2050 Fund (VFIFX)</a> has an expense ratio of 0.15% and contains:</p>
<div class="s-table-container">
<table class="s-table">
<thead>
<tr>
<th>Fund</th>
<th>Composition</th>
</tr>
</thead>
<tbody>
<tr>
<td>Vanguard Total Stock Market Index Fund Investor Shares</td>
<td>54.30%</td>
</tr>
<tr>
<td>Vanguard Total International Stock Index Fund Investor Shares</td>
<td>36.60%</td>
</tr>
<tr>
<td>Vanguard Total Bond Market II Index Fund Investor Shares**</td>
<td>6.30%</td>
</tr>
<tr>
<td>Vanguard Total International Bond Index Fund Investor Shares</td>
<td>2.80%</td>
</tr>
<tr>
<td>Total</td>
<td>100.00%</td>
</tr>
</tbody>
</table>
</div>
<p>Must the expense ratio of the Vanguard Target Retirement 2050 Fund (VFIFX) of 0.15% include the expense ratio of the 4 funds it contains?</p>

<p>SEC regulations require that fund managers include &quot;acquired fund fees and expenses&quot; as an added fee disclosure, which must be included in the comprehensive fee schedule found in the prospectus according to <a href="https://www.investopedia.com/terms/a/acquiredfundfeesandexpenses.asp" rel="nofollow noreferrer">https://www.investopedia.com/terms/a/acquiredfundfeesandexpenses.asp</a></p>
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<h2>SEC Regulation and Disclosure</h2>
<p>In January 2007 the Securities and Exchange Commission (SEC) began instituting new provisions to the <a href="https://www.investopedia.com/terms/i/investmentcompanyact.asp" rel="nofollow noreferrer">Investment Company Act of 1940</a>, which made it easier for fund companies to register fund-of-funds options. The SEC broadened <a href="https://www.sec.gov/rules/final/2006/33-8713.pdf" rel="nofollow noreferrer">legislation</a> under Section 12(d)(1) of the 1940 Act for multi-manager funds. The SEC also revised its registration statement forms to include additional detail on the expenses for these funds. Specifically, <strong>registration statements now require that fund managers include &quot;acquired fund fees and expenses&quot; as an added fee disclosure requirement for multi-managers, which must be included in the comprehensive fee schedule found in the prospectus.</strong></p>
<p>Prior to 2007, fund-of-funds investing was only allowed under specific circumstances approved by the <a href="https://www.investopedia.com/terms/s/sec.asp" rel="nofollow noreferrer">SEC</a>. In most instances, these fund-of-funds investments would report <a href="https://www.investopedia.com/terms/e/expenseratio.asp" rel="nofollow noreferrer">expense ratios</a> of zero. Disclosure was misleading, presenting that there were no expenses and reporting that there would be operating expenses incurred by the various underlying funds in the portfolio.</p>
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united-states finance fees sec