SEC’s fund names rule making little impact after six months

Only leading to more ESG confusion. Plus, the staying power of Exxon.

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What’s in a name? It’s a thorny issue.

(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — Very little has changed in the six months since the Securities and Exchange Committee updated its venerable “Names Rule” in hopes of cracking down on greenwashing among mutual funds.

You shouldn’t be surprised.

The Names Rule, which was originally adopted in 2001, required mutual funds with names mentioning a focus on a particular kind of security — such as “small-cap” or “value” stocks — must be at least 80% invested in stocks that meet the criteria. The changes adopted last September expanded the rule’s scope to include funds with names mentioning certain investment strategies — such as ESG.

Many predicted the name change would have a huge impact. One commentator gushed that “greenwashing will soon be much less of a concern to U.S. investors.”