Both leading up to and following the introduction of the Retail Distribution Review in January 2013, there was wide speculation on the scale of impact it would have on investment trusts. While it was acknowledged to be a clear levelling of the playing field in that independent financial advice must pro-actively include investment trusts in advisers’ considerations, there was a fair amount of cynicism over the extent to which this would happen.
However, one evolution that we have seen among investment companies is that of diversification on investment company boards—unexpected but welcome progress.
There are currently some 1,600 non-executive directorships on UK-listed investment company boards, of which nearly 230 roles are held by women—more than 10% of those are in the role of chairmen, too. That’s some 14% overall right now and I’d argue it’s come a long way for an industry that was referred to not so long ago as being full of ‘fuddy-duddies.’
That’s not the whole picture, either. In the last four years, some 22% of board appointments have been of women and that rate has been growing year-on-year. In 2014 alone, women have been appointed to 28% of investment company directorships. Granted, the sector had some catching-up to do, but credit where credit is due--there’s no denying that here is an area in which investment trusts have made real progress that’s in keeping with that of FTSE 100 boards—where, according to The 30% Club, nearly 23% of FTSE 100 board positions are held by women.
Investment trust boards have oft been berated for being stuck in the dark ages and slow to adapt. I don’t believe that’s the case, particularly since the introduction of the RDR, and their positive attitude towards the importance of gender diversity is one such demonstration of this. There is a gradual rise in the number of female fund managers, for example, who have taken the next step in their career and are bringing their experience to the board room discussions.
Further, the new regulation has prompted boards to really test the validity of their fund proposition and its relevance in the marketplace. That has to be done by nonexecutive directors who understand the industry and its direction of travel. No longer can they rely on cost advantage, given the arrival of super-clean share classes. So we’ve seen them react to this changing environment. That reaction has taken many different directions—reduction in fees, scrapping of performance fees, appointment of new managers, changes to investment mandates—all valid and necessary changes that enhance the attractiveness of that offering.
It’s not just the investment trust industry that is waking up to the diversity argument, it’s happening in the ETF industry too. Just last week we saw the launch of the London chapter of Women in ETFs: a launch event that was attended by more than 100 ladies (and a few men, too) and it was standing-room only. A primary aim of this organisation is to facilitate networking opportunities for women in the industry and it’s aimed at women of all levels. They are building a program of events to offer education and support as well as encouragement to share ideas, for the current and future generation of women in ETFs.
The industry bodies are embracing this change, too. The AIC’s recent voting pack for members cites eight candidates standing for five vacancies at their forthcoming AGM and three of those eight candidates are women—a great endorsement of the times.
This article originally appeared in Investment Adviser magazine
