SEC Move to Limit ‘Fund of Funds’ Redemptions Irks Money Managers

Investment managers aren’t buying into an SEC proposal that would restrict the amount of shares a fund can redeem from another fund, as the agency moves to update rules for these arrangements.

The Securities and Exchange Commission’s planned rewrite of “fund of funds” regulations would make investment objectives harder to reach and harm retail investors, Wells Fargo & Co., JPMorgan Chase & Co., and Nationwide Mutual Insurance Co. said in recent letters to the agency.

The investment strategy involves funds holding a portfolio of other funds rather than selecting individual stocks, bonds or other securities. It’s a main ...