November 28, 2023
In early 2023, the SEC introduced an updated 2023 taxonomy (a set of data files that determines the ultimate structure required of filed documents) for mutual fund risk/return (“RR”) iXBRL filings. The taxonomy is largely similar to current and previous RR taxonomies, but it does introduce a few new elements to be aware of when reviewing drafts and filings. The taxonomy exists concurrent to the 2022 taxonomy, which is still accepted for filings (likely until sometime in 2024).
The SEC mandated XBRL usage for all mutual fund prospectus filings in 2009. Originally the XBRL was filed separately after the main prospectus filing (e.g., a 485BPOS or 497), but in 2018 the SEC mandated usage of iXBRL, which embedded the XBRL tags into the main HTML filing and eliminated the separate filings of XBRL data. The SEC has released several updated versions of the RR taxonomy since then, typically containing only minor formatting updates or addition of new tags based on updated requirements.
Updates for 2023
Previously, the entire “Principal Risks” section from the Fund Summary section was block-tagged as a single element (“RiskNarrativeTextBlock”), with a few specific detail tags defined in the taxonomy to flag common risk elements based on Form N-1A (such as “RiskLoseMoney” or “RiskNondiversifiedStatus”). However, in the new 2023 taxonomy, the SEC is asking for each individual risk contained in that section to be separately tagged. Hence, no longer will there be a block tag containing the entire section and, instead, each specific risk (e.g. “Market Timing Risk” or “Foreign Securities Risk”) will be tagged individually. Paragraphs from the risk section that do not contain content related to a specific risk (typically intro, closing or narrative text) will not be tagged at all.
Aside from the few specific risks already defined, the SEC has not provided a list/dictionary for specific risks in the taxonomy; each unique risk will be assigned an extension element. Extension elements (the “X” in XBRL!) are created separately and filed along with the iXBRL HTML file. Previously, the only extension elements typically created were for each unique series and class referenced in the filing; with the 2023 updates, there will also be unique elements added for each type of risk defined in the prospectus(es) contained in the filing.
FilePoint has transitioned our clients to the 2023 RR Taxonomy. The SEC typically phases out previous taxonomies within a couple of years of releasing the new one, so we recommend that all filers make the transition soon, if you have not done so already.
What do we need to do?
If you’re a current FilePoint client, nothing! FilePoint will handle the technical updates for all clients. If you are not a FilePoint client, we recommend that you contact your EDGAR service provider to make sure they have either adopted, or have a plan to adopt, the RR 2023.
Future Updates Incoming
In relation to the upcoming 2024 Tailored Shareholder Report (TSR) iXBRL filings, the SEC has released a draft joint taxonomy. This new OEF (Open-End Fund) taxonomy will merge the tagging used for both TSR XBRL filing and RR XBRL filings into a single taxonomy. FilePoint will share developments, as they become available.
Need help? Let us know.
FilePoint utilizes our automation software to automatically incorporate tags into prospectuses, which saves time and eliminates errors. If you have questions or are interested in learning more about our iXBRL services, contact us and one of our regulatory experts will be in touch.