Investment fund management reports clients get the most important information about their investments in a consistent and accessible way. They present performance data in different ways (MTD) (QTD, MTD and YTD), and are often accompanied with information on risk analysis such as VaR or stress testing. Regulatory demands are forcing managers to publish their risk processes in more detail than ever before.
Investors are interested in knowing what they pay for their fund investment, and this is reflected in the increasing demand for more and greater detail on fund fee information. Some funds define management fees in a narrow way and include only costs that are related to choosing the right securities for their portfolio in this number. Other funds have “unified fees” that cover a wide range of costs including records and administrative services, brokerage commissions and 12b-1 fee.
Many funds utilize breakpoint contracts where the management fee is reduced at specific asset intervals dependent on the total assets of the fund. To analyze these contracts, investors should be aware of the management fee at each of those intervals. The GAO recommends the Commission require that funds provide fee information per share at the class level, as well as disclose the fees paid through the principal and not the management fee.
The GAO has also recommended that the Investment Company Act require that independent directors (directors who are not a part of the fund’s management) are at a minimum a majority of a fund board. This is a way to ensure that directors who are independent are able to adequately represent the interests of fund shareholders.