The SEC Marketing Rule, Net-of-Fees Performance and Attribution

24 Oct 2022

Shalini Kurukulasuriya, CFA and Amy Jones, CIPM

Does the Scope of the SEC Marketing Rule Extend to the Presentation of Performance Attribution?

As the deadline for compliance with the SEC Marketing Rule (Marketing Rule) draws nearer, a heightened focus in the registered investment advisor (RIA) community is needed. As of November 4, 2022, all marketing material deemed to be an advertisement must adhere to the requirements of the Marketing Rule.

Firms have been working to interpret the scope of the Marketing Rule as it applies to content in advertisements including the presentation of attribution. The Marketing Rule expressly prohibits the presentation of gross-of-fees returns if net-of-fees returns are not also presented. This has led to the question of whether net-of-fees returns or gross-of-fees returns should be the basis for the calculation of performance attribution analysis.

While neither the Marketing Rule nor current Global Investment Performance Standards (GIPS®) do not specifically state that this applies to attribution, many firms are interpreting it this way.  As a result, some firms are looking to migrate their attribution calculations from using gross-of-fees returns (which has been the industry standard up to this point) to now using net-of-fees returns. This proposed migration is far from a trivial exercise. It would necessitate the firm to spread the investment management fee across sectors, countries, and securities. In our view, this complexity does not add any material insights beyond what is already highlighted using gross-of-fees returns.


There are many ways to perform an attribution analysis and there are probably just as many ways to modify each methodology to account for fees.  In our view, the Marketing Rule does not require an attribution analysis to apply fees to each sector or contributor to performance individually.  Rather, only the impact of fees on the total portfolio needs to be communicated.


Our Recommendation

When incorporating management fees into an attribution analysis, treat them as another source of performance (in this instance, a detractor from performance). 


In taking this approach, the attribution results and interpretation would be essentially unchanged from those produced on a gross-of-fees basis.


The modifications would be the inclusion of an additional line to account for the investment management fees and the deduction of the investment management fee from the bottom-line number. We’ve provided an illustrative example of how this can be done automatically using the Assette platform.

Our recommendation stays true to the spirit of the Marketing Rule of providing prospective investors the transparency and fair representation with respect to past performance while continuing to maintain a meaningful interpretation of attribution analysis. 

Keep in mind, however, that we only see this as a viable solution when the attribution analysis is accompanied by total portfolio performance that is net-of-fees, as in the example above. If the total portfolio return is not presented, fees would need to be allocated to the individual components of the attribution analysis for each component to be presented net-of-fees. Additionally, if the total portfolio results are not presented, they would also need to be disclosed as being available upon request to meet the requirements of the Marketing Rule related to performance extracts.

GIPS® is a registered trademark owned by CFA Institute.

Additional Resources:

TSAM Video on the New SEC Marketing Rule

Assette clients: learn more about Assette's GIPS reporting features -,-2022

Amy Jones, CIPM is one of the industry’s leading experts on performance advertising compliance including applying the SEC Marketing Rule and Global Investment Performance Standards (GIPS®). Amy is the founder and principal at Guardian Performance Solutions LLC.


Shalini Kurukulasuriya, CFA is the head of content solutions at Assette software.