Investment Fund Management Reports and the GAO’s Recommendations

Investment fund management reports provide clients with important information about their investments. They are consistent and simple to comprehend. These reports provide information on performance in various ways (MTD) QTD, YTD and YTD) and are typically accompanied with information on risk analysis like VaR or stress testing. Regulatory requirements are forcing managers to provide more detailed information on their risk management strategies than ever before.

Investors have a strong interest in knowing what fees they pay for their fund investment, and this is reflected in the rising demand for more and more detailed fund fee data. Some funds define management fees more narrowly and include only the costs associated with selecting investments for the portfolio within this number. Other funds have “unified fees” that cover a wide range of expenses including the administration and record-keeping such as brokerage commissions, and www.productsdataroom.com/why-virtual-data-rooms-are-essential-for-investment-banking/ 12b-1 fees.

Many funds have breakpoint agreements that allow management fees to decreases at specific intervals of asset dependent on the total assets of the fund. Investors must be aware of what the management fee is at each interval to evaluate these contracts. The GAO suggests that the Commission require the funds to disclose fee information on a per-share basis at the class level, and to report 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 not associated with the fund’s management) are at a minimum a majority of the members of a fund’s board. This will ensure that the board members are independent and can adequately represent the fund shareholders as well as the interests of fund shareholders.