Understanding SEC Form 13F - SmartAsset

The Securities and Exchange Commission oversees and regulations certain entities that provide financial and investment advice or management services. As part of those regulations, the SEC requires the filing of specific forms that include detailed information about business operations. Form 13F must be filed by institutional investment managers that use the U.S. mail service for business and have assets under management totaling $100 million or more. This form, which is designed to offer transparency and insight into how an institutional investment manager operates, is required to be filed with the SEC quarterly.

Form 13F, Explained

Form 13F was introduced by Congress in 1975 as an oversight tool for large institutional investors. Generally speaking, an institutional investment manager includes entities that buy or sell securities for their own accounts or exercise investment discretion over someone else’s investment account. Following this definition, Form 13F filing requirements can apply to investment advisors, banks, broker-dealers, insurance companies, hedge funds, mutual fund managers, pension funds and registered investment advisors.

This form is required to be filed within 45 days of the end of each calendar quarter. These forms are available for public viewing through the SEC’s EDGAR database.

What’s Included in Form 13F

Form 13F can essentially offer an inside view into how institutional investment managers navigate the markets. This form must include some basic information, such as the name of the institutional investment manager that’s filing the report, but it also includes detailed information about how assets under management are invested.

Specifically, the SEC requires institutional investment managers to provide the following for each security that it’s authorized to manage:

Name and class of the security
CUSIP number
Number of shares held (as of the end of the calendar quarter for filing)
The total market value of those shares

The types of securities that must be reported on Form 13F are Section 13(f) securities. This includes assets that trade on an exchange like stocks and exchange-traded funds (ETFs). It also includes certain equity options, shares of closed-end investment companies and some convertible debt securities. Assets from open-end investment companies, including mutual funds, are not reported on this form.

Again, under the current SEC guidelines, the requirement to file Form 13F applies to institutional investment managers that have $100 million or more in assets. But in July 2020, the SEC proposed a measure to raise the reporting threshold. Specifically, the proposal would increase the threshold to $3.5 billion to reflect that the value of U.S. public equities has increased from $1.1 trillion to $35.6 trillion since the form was first introduced. If the proposal is successful that would mean smaller investment managers would no longer need to file Form 13F.

How to Use Form 13F as an Investor

The SEC’s Form 13F isn’t designed to be a tool for guiding your investment decision-making. Its primary purpose is to shed some light on how institutional investors manage the assets under their discretion. With that in mind, however, investors can and do use Form 13F filings to draw conclusions about how the biggest firms approach the market. If you’re researching a large investment manager that has a significant track record of consistently delivering above-average returns to its clients, for example, you might be curious about how they’re doing it.

By analyzing a firm’s Form 13F, you can study how they invest money and what assumptions they’re making about the market. Theoretically, by following suit you might be able to produce similar results, albeit on a smaller scale if you don’t have hundreds of millions of dollars in assets.

But there are some things to keep in mind about using Form 13F as a guide when making investment decisions. For one thing, it requires you to take the information that’s provided in the form at face value. If an investment manager says they saw XYZ return from a particular investment, then you’re essentially taking them at their word. A Form 13F that’s incomplete or includes inaccurate information could be problematic for you as an investor if you’re relying on it to make trades.

Another issue has to do with the timing for how Form 13F is filed. These forms don’t have to be submitted until 45 days after the end of the previous quarter. So even if a form’s information is accurate, there could be a significant lag in reporting between the time trades are made by the form and the time investors are able to review it.

The fact that Form 13F excludes certain securities, including mutual funds from open-end investment companies, means that it offers an incomplete picture of how an institutional investment management firm invests. As an investor, the more detail you have about a particular investment strategy can be a good thing for making sure it aligns with your own goals and risk tolerance.

Form 13F Is Just One Tool You Can Use to Invest

If you’re trying to decide how to invest or you’re considering working with a financial advisor, reviewing Form 13F can be helpful. But there are other documents you may want to consider as well when building your investment portfolio.

SEC Form ADV is an important one. This form is required for registered investment advisors and it spells out the details of how an RIA operates. That includes how much it as in assets under management, its investment strategy, the number of clients it represents, the fees it charges and how it applies them and whether it has any past legal or disciplinary actions on record. Much of the information that’s included in Form ADV can also be disclosed through an investment advisor’s brochure.

When choosing individual investments, it’s helpful to review a prospectus if one is available. For example, if you’re interested in investing in a particular mutual fund or ETF, you can review the prospectus to learn how fund assets are invested and managed and what you’ll pay for the expense ratio. The expense ratio reflects the cost of owning the fund on a yearly basis.

Annual reports are another document worth taking a closer look at. These are issued to shareholders of a company so you may get one if you already own shares of a specific stock. This annual report can offer an overview of company operations, earnings, profitability, debt and future projections for growth. Those details can help you decide if it makes sense to remain invested in the company.

Bottom Line

A Form 13F is a requirement for institutional investment managers that invest in Section 13(f) securities and hold $100 million or more in assets under management. If you’re considering working with an investment advisor, you may review their most recent Form 13F filing to learn more about their investment strategy. This form can be used alongside other documents when making decisions about where and how to invest.

Tips for Investing

Working with an investment advisor or financial advisor can help you shape a financial plan that’s designed to help you meet your goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
When comparing financial advisors, be sure to ask the right questions. For example, it’s helpful to ask what approach they take when offering financial advice, what type of clients they typically work with, how they’re paid and whether they’re required to follow a fiduciary standard. This can help you find an advisor who’s best suited to helping you achieve your financial goals.