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Time to end the secrecy in fund governance practices
Transparency allied to technology is transforming the fund industry. They are creating a virtuous circle: some very impressive technology is coming into this business at present. It allows for an ever-wider variety of information to be quickly disseminated to investors, stakeholders, service providers, board directors and so forth. Fund governance will soon be caught up in this too.

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There’s an easy way to improve fund governance: benchmark boards. Benchmarking means investors can see where funds are ranked in comparison with others in their peer group. Funds with poor boards would soon improve.

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Analysis by The NED of UK authorised fund manager (AFM) boards shows profound differences not only with regulated fund managers in the US, the nearest category to compare them with, but also with the boards of funds pretty much everywhere including in the EU and offshore as well as in the US.

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The NED’s review of AFMs (authorised fund managers) suggests that the FCA’s requirement to include two independents on UK manager boards will achieve little. The key to the FCA’s reforms is the value assessment. That is something that independents are unlikely to be able to influence a great deal.
 

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Many horrors were uncovered when the last crash occurred. How much better prepared are fund boards for the next one?

The horrors that were uncovered last time were often in the alternative fund sector. Many of these funds were domiciled in Cayman and consequently that was where a lot of the post-crash fallout happened. But it was by no means only Cayman.
 

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