Remarks Before The Conference On Emerging Trends In Asset Management, Natasha Vij Greiner, Director, SEC Division Of Investment Management, Washington D.C., June 5, 2025

Good morning. I am Natasha Vij Greiner, Director of the SEC’s Division of Investment Management. Thank you all for joining us in person or online for the 2025 Conference on Emerging Trends in Asset Management.

Before I begin, let me start with the standard disclaimer: my remarks today reflect my views as Director of the Division of Investment Management and do not necessarily reflect the views of the Commission, the Commissioners, or other members of the staff.

This is the third annual Conference on Emerging Trends in Asset Management. These conferences bring together a variety of asset management industry participants, regulators, commentators, and academics for lively discussion on emerging trends in the industry. I am excited to engage on some of the most important and thought-provoking topics facing the asset management industry today. We will discuss how current events and developments over time are shaping the industry. And we will share insights on opportunities and challenges that we are facing together.

Celebrating 85 Years of the Investment Company Act and Investment Advisers Act

This year marks a notable time in the asset management industry’s history, as we commemorate 85 years of the Investment Company Act and the Investment Advisers Act. To say that we have come a long way since 1940 is an understatement. In 1940, the asset management industry held only about $2 billion in assets, which included about $1 billion held by registered funds.[1] Now, 85 years later, the Commission oversees registered funds that together hold more than $39 trillion in assets[2] and registered investment advisers with approximately $145.8 trillion in regulatory assets under management.[3]

As I’ll touch on in a bit, this increase in fund assets and advisers’ assets under management tells only part of the story of significant industry expansion. The number of investment products and types of strategies being offered have also proliferated over the decades, showcasing endless innovation. The opportunities for American families to invest in the nation’s securities markets are broader and more varied than ever.

The core protections of the Investment Company Act have been crucial in facilitating the growth of the asset management industry and the introduction of innovative new products over the past decades. Congress recognized that, while fund disclosures are vitally important, there was a need for investor protections beyond disclosure due to investment companies’ unique characteristics and their importance in the national economy.[4] In particular, the Investment Company Act provides investors with specific protections against conflicts of interest, misappropriation of funds, and overreaching with respect to fees and expenses.

The Investment Company Act balances these protections with regulatory authority for the Commission to grant exemptions from these requirements where necessary or appropriate in the public interest and consistent with the protection of investors. Indeed, some describe the exemptive authority as the most important part of the Investment Company Act.[5] Without the Commission’s judicious use of its exemptive authority, the Investment Company Act would have the danger of becoming stale and stifling innovation.[6]

The Advisers Act, for its part, is generally principles-based, especially in comparison to the numerous detailed, substantive requirements imposed by the Investment Company Act.[7] The Advisers Act protects investors primarily by its anti-fraud provisions—the fiduciary duty that an investment adviser owes its clients.[8] This principles-based approach provides appropriate flexibility in light of the wide range of services that investment advisers offer their clients and the large variety of advisory clients.

Both Acts strike an important balance, providing protection to investors and stability to the financial markets, while also proving flexible. The Investment Company Act and the Investment Advisers Act have been truly successful in producing a framework that is protective, but also enables change and innovation.

Robust Engagement with Key Stakeholders: Another Legacy of Success

There is also another legacy of success over the past 85 years—the Commission’s and staff’s prioritization of engagement with the asset management industry and other key stakeholders. We value and appreciate this engagement. This back-and-forth is crucial as we consider our regulatory approach, including how and when to permit innovation in the interest of investors. We should not work in a regulatory vacuum. Engagement is critical to our success.

The Conference on Emerging Trends in Asset Management carries on this tradition of engagement. Today’s conference will feature lively panel discussions on several topics:

• Digital assets and tokenization;
• Product proliferation and innovation in registered funds; and
• Retail access to private markets.

Additionally, for our first panel we are fortunate enough to be joined by several former directors of the Division of Investment Management, who will reflect on 85 years of the Investment Company Act and Investment Advisers Act and their time as Director. Their perspective is invaluable as we think about the next 85 years. The past is more than a record of events – it is a predictive tool that can guide us in anticipating potential challenges and help shape the regulatory landscape in a constantly evolving market. In understanding the past, we equip ourselves to better navigate the future.

The topics covered by our panels today reflect developments, opportunities, and challenges facing the asset management industry. I look forward to hearing broad views on these topics today and in the months and years ahead

The Evolution of ETFs as a Case Study in Balancing Innovation and Investor Protection

In discussing trends over time in the asset management industry, the evolution of exchange traded funds (ETFs) is a perfect example of how we can best balance investor protection while still promoting innovation. The evolution of the ETF industry demonstrates the resilience of the Investment Company Act in the face of novel products and strategies. The Commission approved an exemptive order for the first ETF in 1992. Over the next 25 years, the staff, pursuant to delegated authority, granted over 300 exemptive orders to ETFs. In 2019, the Commission adopted a rule codifying exemptive relief for ETFs to operate without obtaining an order.[9] ETFs now account for approximately 25% of investment companies’ net assets.[10] And since the ETF rule was adopted in 2019, the amount of ETF assets has nearly doubled.[11]

Years of extensive engagement with the industry informed, and ultimately culminated in, the ETF rule. The rule reflected conditions that evolved over time, as the Commission considered new ideas from market participants as part of the exemptive application process. The ETF rule was designed to establish a consistent, transparent, and efficient regulatory framework and to facilitate greater ETF competition and innovation.

But now that the rule has made clear the standards and requirements for ETFs to register and operate, we turn our focus to ETFs that fall outside of the rule’s ambit. We continue to receive requests for exemptive relief from active ETFs that seek to operate as “non-transparent ETFs” under a proxy disclosure or blind trust, based on relief that was issued to certain non-transparent ETF sponsors in late 2019. And we continue to consider other innovations, such as funds offering both mutual fund and ETF share classes. As we grapple with these and other next-generation ETF products, the tools and principles that have traditionally supported the Division’s work will continue to guide us.

Some Considerations for Novel and Innovative Investment Products

Innovation in fund investment strategies has continued to thrive over the years. The range of fund strategies available has become notably more diverse over the past 25 years.[12] For example, the number of equity funds that are sector funds increased 100% from 2000 to 2024.[13] Funds with “thematic” strategies have also become very popular. Morningstar data currently categorizes over 300 domestic funds as thematic funds, with over 130 separate “subthemes” ranging from 3D printing to wellness to space innovation.[14] And beyond “vanilla” equity and fixed income, funds investing in alternative asset classes, and using derivatives and other financial instruments to execute their strategies, have attracted substantial amounts of investment.[15]

When we consider products that provide exposure to new asset classes, the core protections that the Investment Company Act and its rules provide are top of mind. These protections include, for example, requirements relating to valuation and liquidity. At the same time, we appreciate that enhancing retail exposure to novel asset classes could diversify investors’ investment allocations and could provide investment opportunities that better match some investors’ time horizons and levels of risk tolerance.

Fund investment in crypto assets is growing and varied. Based on a review of public Form N-PORT data, from December 2022 to December 2024, total net assets of ETFs holding cash and derivative crypto assets have increased from $2.1 billion to $12.7 billion. Moreover, the staff has observed that funds use a variety of strategies to obtain exposure to crypto assets—in many cases through derivative investments—and that they pursue a variety of objectives with respect to crypto assets. Such objectives include funds that seek to track the return of one or more crypto assets, funds that seek to include exposure to crypto assets as part of a broader overall objective, and funds that seek to provide structured returns (including leveraged or inverse exposure) based on one or more crypto assets.

As the crypto asset industry evolves, the staff expects that funds will continue to seek exposure to crypto assets and pursue new objectives involving crypto assets in innovative ways. With such innovation, however, comes opportunities and challenges. We have seen a rise in novel and complex filings over the past year. We are eager to work with applicants to find a path forward while continuing to ensure that the foundational underpinnings of the Investment Company Act and the federal securities laws are upheld. To that end, staff is working closely with the Commission’s Crypto Task Force, which was established earlier this year to provide clarity on the application of the federal securities laws to the crypto asset market and to recommend practical policy measures that aim to foster innovation and investor protection.

Much like investments in crypto assets, investments in private markets are also growing. We have observed a dramatic rise in the number and amount of exempt offerings over the past decade.[16] And the growth in private markets may not be limited to institutional investors—retail investors may also seek to gain exposure to private market investments, such as private funds through registered funds. Registered investment companies report $96 billion in holdings of private funds, an increase of $59 billion, or over 150%, since December 2019.[17] Private funds, like hedge funds, private equity, and private credit funds offer diversified exposure to asset classes across private markets, although the federal securities laws generally limit investors in these funds to accredited investors and, in many cases, qualified purchasers. These typically include institutional investors and high-net-worth individuals. Retail investors, for their part, generally can gain such exposure through investments in registered funds, including, to a limited extent, open-end funds, and more appropriately, closed-end funds. While open-end funds’ portfolios are restricted by both liquidity and daily valuation requirements, closed-end funds, are not subject to such restrictions.

As a result, closed-end funds can offer retail investors greater exposure to less-liquid asset classes, such as private fund investments, while still subject to the protections of the Investment Company Act and management by a registered investment adviser. With this in mind, we are working with registrants on an appropriate path forward with respect to the potential of further opening this channel to retail investors. Our understanding of private markets has increased significantly over the past several years, as have disclosure practices by both registered and private funds. As a result, I believe it is appropriate to consider under what circumstances private fund investments should be available to investors who are not accredited investors or qualified purchasers, through these registered fund vehicles. That said, robust disclosure is appropriate for funds that are available to retail investors and that invest in complex assets like private funds. Our disclosure staff is diligently working with issuers that want to offer private fund-of-fund products, ensuring that their disclosures are tailored to retail investors. I ask that issuers reach out to their IM reviewers and have patience as we work through these disclosure issues.

Concluding Remarks

Before I conclude my remarks today, I would like to acknowledge the tireless dedication and unwavering commitment of the Division staff. As we celebrate the 85th anniversary and note the significance and resilience of the Investment Company Act and Investment Advisers Act, it is also critical to acknowledge the people who work day-in and day-out at this agency to uphold the foundational principles of the Acts and ensure that they remain evergreen. When I addressed this conference last year, I had only been Director for a short time. Since we last gathered, the Division has been incredibly busy and productive. I am constantly impressed by the professionalism and collegiality of our staff. While administrations may change and the topics of the day may evolve, the staff remains steadfast, bring their professionalism and expertise to the office (both figuratively and literally) every day to ensure that the core tenants of the Acts are maintained. Their diligence and professionalism have been instrumental in the Division’s success. Today’s conference is just one example of their hard work.

I’d also like to thank today’s panelists for their time, expertise and willingness to participate in today’s conference and to share their varied perspectives. Their input will be, I’m sure, thought-provoking, and I look forward to hearing their observations of, and any lessons learned from, those emerging trends in asset management that they highlight today.

As the investment management industry continues to grow and innovate, one thing remains constant—the importance of the Commission’s tri-partite mission. As we look ahead —and focus on setting guardrails within which the asset management industry can continue to innovate—it is important to keep in mind the importance of the resilience and adaptability of the existing structural and regulatory protections contained in the Investment Company Act and the Investment Advisers Act. 85 years later the foundational principles of both Acts still hold strong.