The Hedge Fund Industry is lobbying the SEC to be included in a proposal that would allow mutual funds to invest more in exchange traded funds (ETFs) then what is currently allowed. Under the Investment Company Act of 1940, mutual funds and hedge funds are limited to ownership stakes of no more than 3 percent of the outstanding voting shares of ETFs. The new SEC proposal would raise the current ownership allowed, but only for mutual funds. The Managed Funds Association (MFA) contends that by allowing hedge funds a greater ownership of ETFs would enhance the ability of private funds to meet their investment objectives, enhance market transparency, and increase liquidity and trading of ETFs. Jennifer Han, legal counsel for the MFA, advocated further for inclusion of hedge funds in the SEC proposal, stating, “there’s no policy rationale for distinguishing hedge funds from other institutional investors. Hedge funds use ETFs like other institutional traders. They use it for hedging purposes and risk management, and also to equitize cash balances.”