Investment fund management reports help clients with vital information regarding their investments in a consistent, accessible way. They typically present performance data in a variety of ways (MTD QTD, MTD, and YTD) and are usually accompanied by risk analysis data like VaR and stress testing. As regulations are increasing, managers are required to report on their risk processes in more detail than ever before.
Investors have a strong interest in knowing what fees they are paying for their fund investment, and this is reflected in the rising demand for more more detailed fund fee data. Certain funds define management fee narrowly, and only include costs associated with selecting portfolio securities within this category. Other funds have “unified” fees that cover a variety of expenses, such as the administration and record-keeping services, brokerage commissions and 12b-1 fees.
Many funds employ breakpoint contracts where the management fee decreases at certain asset intervals depending on the total assets of the fund. To analyze these contracts, investors must be aware of the management fee for every interval. The GAO suggests that the Commission requires funds to provide fee information per share at the class level, as well as to disclose any fees paid out of principal and not from the management fee.
The GAO has also suggested that the Investment Company Act require that independent directors (directors who are not part of the management of the fund) constitute at least a majority of a fund’s board. This will ensure that board members who are independent are able to adequately represent shareholders and their interests.
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