Fund Governance Survey highlights
By Tracey McDermott, Andrea Montresori, Martin Vogel & Valerie Warland

​Fund Governance Survey highlights

The 11th Fund Governance Survey by ILA and PwC was released on the Fund Day, giving a snapshot of changing industry trends. Although not a scientific survey, it is based on the replies 137 participants (a 10% increase on 2020) from 20 countries representing about half the country’s AuM. There was a roughly 50/50 split between UCITS/alternatives funds.

Key results were presented by Andrea Montresori, PWC partner. 

A noticeable point is that the share of non-executive directors on fund boards increased to 39% in 2022, a 9% increase since 2018. There was little change in the numbers of directors on boards, with the norm being around three to four for AIFs, and around five for UCITS. The length of tenure, 5 to 6 years, was also broadly consistent with the result of two years ago. The proportion of boards having a permanent chair was down approximately 10% since 2020 to 83% for Super ManCos.

Two thirds of board members have written terms of appointment formalising their board position.

In terms of skillset, specialisation areas such as governance, portfolio management and fund administration were the most prevalent, whereas for IT, ESG and AML expertise, we still witness some gaps. Andrea noted that boards are mindful of this challenge, pointing to the survey which showed that nearly all boards have an annual procedure to assess board composition. As for training, 67% of directors have spent at least three days on courses provided by the board, with the survey pointing to ESG and AML training being particularly sought after. It was noted, with perhaps some surprise, that cyber was not a leading area of study.

Perhaps also a little surprising was the lack of change in the percentage of female directors over the previous two years, with the figure remaining stable at 22%. In the panel discussion after the presentation, Valerie Warland, an independent director, noted that while at first this may appear to be disappointing, this figure is in line with the European financial services norm. It was also discussed whether and how overall board diversity, and not just in terms of gendershould in the future be measured.

The average number of meetings per board per year remained stable at 7.4, ranging from Super ManCos at 5.4 to 14 for AIFMs (the higher number for AIFMs being explained perhaps by the different types of board meetings that are required for AIFMs). The average time spent reviewing board papers is down from 5.33 hours in 2020 to 4.31 in 2022. Andrea suggested this was a function of the use of more efficient digital tools, and that AIFs investment strategies often require less scrutiny than large UCITS.

Some additional highlights noted were:-

  • All fund boards said they declare their conflicts of interest at the beginning of meetings.
  • Nearly 100% of boards have approved the AML policy of the fund/company. 
  • There has been a sea of change witnessed in how boards deal with ESG. In 2020 only 17% of AIFM boards had a common definition of the concept, but this increased to 65% last year. 

Commenting on the survey, Tracey McDermott, an independent director said she is “a big advocate of this survey, as going through the questions not only adds value when servicing your clients, but also assists in the self-evaluation process and prompts critical thinking.” She reminded participants that completing the survey enables boards to receive a personalised benchmarking response from PWC. 

The survey is available for download at Link to Luxembourg Fund Governance Survey 2022



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