Investment Fund Management Reports and the GAO’s Recommendations

Investment fund management reports provide clients with crucial information regarding their investments. They are consistent and easy to understand. They typically present performance information in a variety of ways (MTD, QTD, and YTD) and are usually supported by risk analysis data like VaR and stress testing. Regulations are forcing managers to provide more specific http://productsdataroom.com information on their risk management processes than ever before.

Investors are more and more interested in knowing what they pay for their fund investments. This is evident by the need for more specific data on fund fees. Some funds define the term management fee in a narrow sense, and only include costs related to selecting portfolio securities in the above list. Other funds have “unified” fees that cover a wide range of costs, including administrative and record keeping services, brokerage commissions and 12b-1 fees.

Many funds use breakpoint contracts that allow management fees to decreases at specific intervals of asset dependent on the total assets of the fund. Investors must be aware of how much the management fee is at each interval to assess these contracts. The GAO recommends that the Commission require funds to provide fee information per share at the class level and to also disclose the fees that are from the principal but not from the management fee.

The GAO also recommended that Investment Company Act requires that independent directors (directors who aren’t associated with the management of a fund) are at least a majority of members of a board of a mutual fund. This will ensure that the board members are independent and can adequately represent the shareholders’ interests.