Mutual Fund Governance

Management Practice (MPI) has been an active adviser to mutual fund directors and their counsel since 1970. MPI provides independent information to help fund trustees carry out their responsibilities. Originally, MPI’s work focused on the contract renewal process, but it now also includes consultation concerning the dynamics of the board itself, fee negotiation, and trustee compensation and benefits. In each of the areas outlined below, we have worked closely with advisers, counsel, and independent directors. MPI does not either directly or by implication provide legal advice.

Mutual Fund Contract Renewal/15(c)

MPI assists fund boards with the process of analyzing, negotiating and renewing the advisory and other related contracts. This includes fund-by-fund review, graphical analysis and written summaries of findings with regard to:

  • Performance

    absolute, relative, and risk adjusted

  • Fee assessment

    including fees for advisory,distribution, administrative, transfer agency, fund accounting, sub-advisors, custody, and other fund services

  • Profitability

    including creation of process or analysis of current process and results, and production of an annual comparative industry profitability study

  • Economies of scale and break points in fee structure

  • Portfolio Operations

    including style drift, brokerage costs/trading efficiencies, and tax efficiency

  • Shareholder Service Quality

Compensation Review for Fund Directors and Chief Compliance Officers

For over 20 years MPI has compiled industry compensation data through proprietary surveys and other sources. We can provide complete compensation benchmarking and consulting using industry peer group comparisons, as well as more in-depth studies using our “Degree of Difficulty” methodology, which looks at the full complexity of the role, including the effort, expertise, exposure, and opportunity cost required, in order to properly set pay levels.

Fund Director Self Assessments and Board Dynamics

MPI can help fund boards with the annual board assessment along with numerous issues related to effectiveness, including committee structure / restructuring, skills and expertise requirements, education needs, retirement issues, etc.

Fund Director Search

With specialized knowledge of the fund director position and access to a proprietary database and network of qualified candidates, MPI will manage the entire search process, including:

  • Preparation of retirement schedule needs assessment, and selection criteria
  • Review and initial screening of candidates
  • Management of candidate engagement and interviews
  • Credit, legal and background check of qualified candidates
  • Presentation of finalists to board
  • Full documentation of the process as required by the SEC

Director Education

  • Industry Events – MPI participates in numerous industry conferences, webinars and workshops each year.
  • Trustee Educational Materials – MPI has published several books and white papers, and distributes periodic bulletins on current governance topics.

Expert Witness on Behalf of the Independent Trustees of Mutual Funds

MPI partners have served as expert witness for independent directors in a variety of cases.

Special Topics

MPI has expertise and can assist boards in the analysis of:

  • Proxy voting
  • Soft dollars
  • Trading practices
  • Possible change of adviser or sub-adviser – including selection criteria and priorities
  • Evaluation of proposed changes in management fees or other elements of fund expense
  • Evaluation of costs related to proposed or existing 12b-1 plan