Toward Better Mutual Fund Governance
Handbook on the Regulation of Mutual Funds (William A. Birdthistle & John Morley eds., Edward Elgar, 2017, Forthcoming)
20 Pages Posted: 20 Mar 2016 Last revised: 12 Apr 2017
Date Written: August 17, 2016
This chapter evaluates the implications of an emerging model of mutual fund governance for effective oversight and regulation. As in the traditional model, in which a board of directors or trustees serves as the board of multiple discrete funds managed by a single investment adviser, this alternative model similarly contemplates the creation of multiple funds, but it eschews a single investment adviser charged with managing each fund’s assets. Rather, there are numerous advisers, each managing one or a small number of funds within the group. Although the new model may portend an improvement over the traditional model in some respects, questions arise as to whether it introduces concerns of its own and whether those concerns are more or less manageable than those to which the traditional model gives rise. The chapter contends that, although the new model produces risks not associated with the traditional model, there are reasons to believe, at least preliminarily, that it is at least as effective as the traditional model.
Keywords: mutual fund regulation, Investment Company Act of 1940, corporate governance, financial services
JEL Classification: K22
Suggested Citation: Suggested Citation