3.1 Role of the Board
What is an investment trust board?
It’s easy to assume that investment trusts are similar to other investment vehicles.
However, investment trusts have some characteristics that aren’t shared with unit trusts and funds. These can make a positive difference to performance and returns. Moreover, they give investors a voice.
One big difference is that investment trusts have a separate board of directors. These directors sit above the fund managers who decide on a day-to-day basis which assets to buy and sell.
The directors’ job is to decide the focus of the trust itself as well as keep an eye on performance.
Investment trust boards consist of a chairman, an accountant and other experienced individuals with relevant skills. That could include investment management, business management, finance, compliance or sales and marketing.
Although the board doesn’t involve itself in day-to-day trading decisions, it has the power to change an investment trust’s mandate. That in turn could change the types of assets the trust invests in.
In recent cases this has meant boards voting to increase the proportion of the trust’s assets that are invested in companies that aren’t listed on the stock market.
In extreme cases, an investment trust’s board can even dismiss a fund manager, although this is rare.
As well as scrutinising performance, investment trust boards are often cited as one of the reasons why charges for these types of vehicles can be lower than they are for unit trusts and funds.
Boards have been able to negotiate lower charges on behalf of investors, which in turn has an impact on returns. Experience and independence make a difference.
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Investment is subject to documentation. The Investor Disclosure Document, and Key Features / Terms & Conditions can be obtained free of charge from JPMorgan Asset Management (UK) Limited, and the Key Information Document can be obtained from JPMorgan Funds Limited or www.jpmam.co.uk/investmenttrust. This communication is issued by JPMorgan Asset Management (UK) Limited, which is authorised and regulated in the UK by the Financial Conduct Authority. Registered in England No: 01161446. Registered address: 25 Bank Street, Canary Wharf, London E14 5JP.