HR 2225: Access to Small Business Investor Capital Act

HR 2225 in plain English: This bill changes how certain investment fees are calculated and disclosed for registered investment companies. Specifically, it allows these companies to exclude fees and expenses from business development companies when calculating the 'acquired fund fees and expenses' line item on their fee schedules.

Stated purpose

This bill allows registered investment companies (such as mutual funds) to leave out the fees from business development companies when calculating and reporting a required fee disclosure line called 'Acquired Fund Fees and Expenses,' making it easier for these funds to invest in business development companies.

Key points

• Allows registered investment companies to exclude business development company costs from required fee disclosures.
• Affects how the 'acquired fund fees and expenses' line item is calculated on fund fee schedules.
• Could make it easier for investment funds to invest in business development companies, which support small businesses.

Arguments supporters make

• The current fee-reporting rule discourages funds from investing in business development companies, cutting off a useful source of capital for small businesses that struggle to access traditional financing.
• Removing this reporting barrier could channel more investment into BDCs, which are specifically designed to support small and mid-sized American companies and create jobs.
• The change simply adjusts how fees are displayed on a form — it does not eliminate fees or reduce transparency in any other part of the disclosure.

Arguments opponents make

• Allowing funds to omit BDC-related fees from the standard disclosure could make a fund's total cost look lower than it really is, leaving everyday investors with an incomplete picture of what they are actually paying.
• Reducing reported fees on fund disclosures may make it harder for investors to compare the true costs of different funds on an apples-to-apples basis.
• The existing rule was designed to give investors a full accounting of layered fees; creating an exemption for one category of investment sets a precedent that could weaken fee transparency more broadly over time.

Tradeoffs

Making it easier for funds to invest in BDCs — and potentially increasing capital for small businesses — comes at the cost of giving retail investors a less complete picture of the fees they indirectly pay; the bill trades full fee transparency in fund disclosures for potentially greater small-business investment.

Current status in Congress: Passed House.