What is fund governance?
A system of checks and balances that ensure an investment fund is operated in the best interests of the fund and its investors. Fund governance is the responsibility of the fund’s governing body (board).
Where have you heard about fund governance?
Governance failures, such as the Bear Sterns hedge fund scandal in 2007.
What you need to know about fund governance.
The main objective of fund governance is to protect the fund’s investors. The board are required to act in the interest of the fund as a whole rather than one particular investor.
Governance responsibilities for an investment fund will depend on the requirements of the fund’s jurisdiction and the terms set out in the fund’s documents. In the US, there is a requirement for a certain percentage of a fund’s board of directors to be independent. In 2017, the UK Financial Conduct Authority proposed a requirement for UK funds to have a minimum of two independent directors on their boards.