Updated SEC Marketing Rule FAQ: Clarification Regarding Presentation Of Net Extracted Performance

On March 19, 2025, the Securities and Exchange Commission (SEC) staff issued an update to its frequently asked questions (FAQ)¹ guidance with respect to registered investment advisers' compliance with Rule 206(4)-1 (Marketing Rule) under the Investment Advisers Act of 1940 (Advisers Act). The FAQ provides new direction for advisers on the presentation of gross and net extracted performance data for a single investment or a group of investments (an "extract") in marketing materials, as well as guidance as to whether certain portfolio or investment characteristics would constitute "performance" for purposes of the Marketing Rule.

The Marketing Rule originally required the presentation of gross extracted performance to be accompanied by a presentation of net extracted performance. This was made explicitly clear in a prior SEC FAQ published on January 11, 2023.² Under the updated FAQ, however, an adviser will now be permitted to present gross extracted performance and