New Research on Funds Governance
A new report from IFI Global and supported by Jersey Finance entitled ‘Funds Governance in 2021: What it Means to Investors’ has been published. The report explores how approaches to fund governance are shifting amongst international investors as we move into a post-pandemic ‘ESG era’.
Based on the views of investors and their advisors in North America, Europe, Asia Pacific and the Middle East, the research found that the rise of ESG investing, demands for specific experience and greater expectations on transparency are all shaping the fund governance landscape – but there is still a way to go for managers and boards to align with the governance objectives of investors.
Most investors, according to the survey, believe that ESG considerations will have an impact on fund governance and that there is an increasing demand for board directors to have specific portfolio management or industry experience in the underlying strategy, and for them to be independent and have term limits imposed on them.
All those surveyed felt that the purpose of fund governance is protect the interests of investors, rather than to serve the interests of the fund. Meanwhile, gender diversity on the board did not evoke particularly strong feelings, though there was a sense that ESG investing might impact this.
Elliot Refson, Head of Funds at Jersey Finance, said: “The findings of this new study provide a valuable insight into the thinking of investors, who we know, based on this and previous research, are driving change in the alternatives space.
“It is perhaps surprising that, in a period where we have seen unprecedented change, fund governance continues to evolve at a relatively slow pace. Nevertheless, approaches to governance are maturing in response to the ESG drive, greater demands for transparency and the need for deeper levels of experience. This is now the clear challenge for fund boards and managers – to focus on ensuring that their approaches to governance are fully aligned with those of their investors.
“It’s a challenge we are fully engaged with in Jersey, where we have a deep and broad talent pool across asset classes and have already taken great strides in terms of the G element of board diversification.”
The new research can be viewed and downloaded here.